INDU Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, May 30, 2000

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[English]

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

We're very pleased to welcome here today, from the Canadian Tourism Commission, the president, Mr. Terry Francis; and Mr. Gerald Bailie, the executive assistant to the president.

I believe you're going to run the program and Mr. Francis is going to talk; is that what's going to happen?

Mr. Terry Francis (President, Canadian Tourism Commission): We're going to try.

The Chair: Okay. So whenever you're ready, please proceed.

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Mr. Terry Francis: Thank you.

[Translation]

Good afternoon. My name is Terry Francis and I am President of the Canadian Tourism Commission. Thank you for inviting me today. I am always pleased to speak about the success of a model partnership: the Canadian Tourism Commission.

[English]

Before I go into my presentation, I thought I would give you a bit of a background of where we were before we moved into the SOA we are today.

In 1992-93, the background economic situation was a North American recession, climbing unemployment and interest rates, large operating losses from airlines and accommodation sectors, a deteriorating U.S. travel market, the competitive scenario of emerging Asian markets, limited air access, and domestic travel losing market share. Tourism in Canada had underutilized capacity throughout the country, had low return on investment, was under-resourced by governments, was under-partnered with the industry, and was lacking a coordinated marketing effort and product development programs.

That was the background under which our chairman, Mr. Buchanan, started the process of getting us into an SOA. We also had a travel deficit that was growing, which in 1992 had reached $6.4 billion.

The new approach set about in April 1, 1995, was basically setting up an operating agency. It was through Order in Council with an empowered board. The SOA was set up to provide greater operational flexibility, with a department outside Industry working with the tourism industry, although policy continued to remain with Industry Canada, as it does today.

It offered increased management flexibility in return for agreed-upon levels of performance, so we were in a better position to deal with joint partnership programs with the industry, even though in the organizational way it was set up, the programs became the responsibility and accountability of the board and human resources and finance continued to remain the responsibility of the Deputy Minister of Industry.

It afforded an opportunity to demonstrate success in that whatever programs and partnerships we took together, we were now in a position to measure them and measure the effectiveness and success of our programs.

The private-sector-led board set up at the time had 26 members: 17 from the private sector, including the chair; seven provincial and territorial representatives; one federal government representative, who was the Deputy Minister of Industry; and the president of the Canadian Tourism Commission.

The approach of the SOA, as it is today, was to form partnerships with the private sector. We don't do anything unless we are matched in the private sector on our programs. We marketed destinations with cities and regions of the country, as well as private sector and specific attractions, either directly or through city or regional tourism organizations.

We continued to work with associations—for example, the Tourism Industry Association of Canada, the Tourism Industry Association of Nova Scotia, and such organizations—and we dealt with provincial and territorial governments, though most of them over the years have also moved to create the same model as the CTC within their provinces, so separate marketing organizations for tourism.

I'll give you an idea of the expenditures and how the partnership has worked. If you look at the chart, you'll see that in 1995 the federal government provided $50 million, which was matched almost one for one by the private sector. Then you'll see the growth over the years, and in the last fiscal year, 1999-2000, we had about $70 million in tourism, which is $65 million plus the carry-over from the previous year, and generated an equivalent value out of the partnership program of about $90 million. So moving from 1992 to about 1999-2000 we moved from an expenditure of about $50 million on tourism to about now $160 million, which is a joint government-private sector partnership.

Given that as a background, why the move towards a crown corporation? We believe, as the industry consultation and partnership have matured, we are ready for the next step to be more flexible, more market-driven, more tactical. We want to have a more stable footing in clarifying accountability, changing it from the split we have today with the board running the programs and HR and finance reporting to Industry Canada, to bring it all under one umbrella. We will have a more businesslike approach and greater administrative flexibility, particularly in contracting. We will have matching financial policies to the business we're in, which is a lot different from what the other departments within Industry Canada do.

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At the urging of the industry, we see this as a signal of the government's commitment to the tourism sector that it has supported over the last five years very generously.

There are new challenges for tourism. Tourism is seen as a great contributor to economic growth by most countries around the world, so it's a much more competitive business than it has been in the past. If you see what's happening in Asia, tourism is one of the major tools being used in their recovery program. There are very aggressive marketing programs out of the Asian countries.

The environment remains a challenge. Even though we have icons that identify Canada and provide the attraction for Canada, we have to ensure the sustainability of the tourism product so that it's good for the long term and not only for a short-term use.

Our research says that a foreign view of Canada shows us as a safe, clean, very scenic country, but cold and boring. It's been a big challenge over the years to show it with an attitude change. We do have a lot of activities; we do have a lot of things in the country that make it competitive with other destinations. It's a big attitude shift that we have to try to change in the marketplace.

Competition is fierce, particularly from the U.S. and other destinations like Asia. Basically, with the partnership programs, we have to keep convincing the partners that the CTC has a long-term viability as a unit and continue to get their support and investment.

I talked a little bit before about the limitations of the SIA, which was a split accountability, so I won't go over that again.

Today in the financial system, because the way our business acts in the tourism side is so different from the other departments, contracting processes are cumbersome, particularly in the industry-driven environment, where if you have partnership programs you don't have the ability of recognizing the revenue you can collect in the partnership. It lacks flexibility to match industry decisions. In a competitive environment, the industry is getting a lot quicker at reacting to opportunities in the marketplace. Financial policies really don't match the requirement of the tourism sector, although I'm sure they work well for the other sectors.

The crown corporation characteristics we are looking for are: to find the right balance between the benefits of public policy objectives and the cost-efficient delivery of goods and services; to function like a private sector, particularly given that our big base is the private sector firms we deal with today; and to be free from the undue administrative burdens we have to go through in order to carry out our mandate.

Our mandate remains tourism marketing, and strictly tourism marketing, with the objective of sustaining a vibrant and profitable tourism industry. We want to market Canada as a desirable tourism destination. We continue to do the “Brand Canada”. A lot of the provinces and a lot of the other areas promote their own areas, but we promote the Canada brand. The research and the industry would support the view that Canada is more easily recognizable in the international arena than the other areas standing on their own. So there is extreme focus on promoting the Canada brand.

We will support cooperative marketing relationships between private sector and government. When we talk private sector, our partnerships are not limited to only Canadian partnerships. For example, in Japan we would have partners in the industry in Japan who are interested in promoting their business and promoting traffic to Canada. We can attract them to move traffic to Canada away from other cities they're involved in.

Basically, a serious role of the Canadian Tourism Commission is to provide state-of-the-art information about Canadian tourism to the private sector. This is our business, our complete business, so we are looked at to provide leading-edge research, as we should. How do we perform competitively? What is the demand curve? What are the segments we need to address in order to keep the business growing and alive in future years?

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The composition of the board basically remains unchanged. There are 26 persons, with about 17 from the private sector, including the chair; seven representing the government, provincial and territorial; the president of the board; and the Deputy Minister of Industry. The provincial-territorial tourism ministers or their designate at the deputy minister level or the head of their marketing agencies could be represented on our board. We have established a board-nominating committee to suggest a slate of private sector appointees to the minister for his appointment.

The marketing program responsibility will continue to stay as it has been with the programs, adding the financial and human resources management to that accountability.

As we move into the crown corporation from the human resources side, we will be moving our Canada-based staff to the Canada Labour Code from the public service side of it. In terms of the locally engaged staff, we have about 60 people who are based outside Canada in the United States, in Asia, and in Europe. We are in the process of developing employee programs and work programs, keeping in mind that we have to meet the test of the work conditions of the countries in which we reside.

On the accountability front, the Minister of Industry continues to have power of direction. The Minister of Industry retains responsibility for tourism policy. Tourism policy does not lie with the Canadian Tourism Commission. The annual corporate plan and budgets are approved by the ministry of Canada and the Treasury Board.

The CTC is subject to the following acts: Financial Administration, schedule III; Access to Information; Official Languages; Privacy; and the Federal-Provincial Fiscal Arrangements.

As we have headed in this direction, with a lot of support from the industry, the chairman of the organization and others have done some consultation on this. Generally, from the provinces and territories there is support for us heading in the direction of a crown corporation, for the benefits I outlined previously. The private sector has indicated a strong support for us moving in this direction to keep the momentum continuing. Generally, people like the existing board structure and the balance the board structure represents between the private sector and the public sector.

The marketing mission of the CTC, which was developed by a committee headed by one of the board members and in consultation as we went around the country, continues to be that Canada will be the premier four-season destination to connect with nature and to experience diverse cultures and communities.

That, Madam Chair, is the end of my presentation. I thought I'd leave time for questions. Thank you.

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

We're now going to deal with questions.

[Translation]

Mr. Brien, please.

Mr. Pierre Brien (Témiscamingue, BQ): I have several questions. I will begin with a question about the independence of the Canadian Tourism Commission. How is it that the special service organization could not answer to the needs of its private partners? Give me some examples. You say that it will be more flexible and more functional. You are talking about principles, but can you give us examples of situations where the Commission could not, as an organization that offers its services, respond to the needs of the private sector?

[English]

Mr. Terry Francis: For example, if we're doing a partnership program where we are promoting a partnership, we have the inability to collect revenue coming in here. Therefore, in order to get the partnership going, we are using ad agencies to be the coordinating body between the two partners so that we can put money in there and they can put money in there. That's a formula that partners don't like because it brings a third party into it rather than having us dealing directly with each other.

[Translation]

Mr. Pierre Brien: Very well. Regarding the other aspect of your independence, you seem to allude to a certain amount of independence from the government, even if the minister still has a role in the Commission.

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How can the Commission be independent if its members or those of its upper management are appointed by the minister? Even if you suggest a list of names to him, the Governor in Council still has to approve the appointment of the seven remaining representatives. How could you be really independent if the Commission members are appointed in this way?

[English]

Mr. Terry Francis: The process of nomination has worked for the commission to date, with the representatives we have on the board. The real change we see in the autonomy and the accountability is that it's not a split accountability where you have, on one hand, a board that looks after programs and, on the other hand, a different segment looking after HR and financial policies. So there is a little bit of, “Well, we could do this if we only had this”.

I think bringing it all under one roof creates the responsibility on both sides that allows both management and the board to make directions over the whole program, rather than just parts of it.

[Translation]

Mr. Pierre Brien: The stated goal of your mandate is to promote Canada as a destination for tourists. Do you want to do this promotion internally, within Canada or is your mandate mainly to seek to attract people from abroad? Currently, how much of your activity is dedicated to promoting Canada abroad and how much of it do you dedicate to promotion within Canada? It seems to me that in Quebec, for instance, the Canadian Tourism Commission currently has a high profile. It is more visible there than abroad.

[English]

Mr. Terry Francis: That is correct. Only about 7% of the commission's marketing budget is dedicated to the Canada program. The rest of it is dedicated to promoting customers coming from other countries into the country, whether it's from Europe, Asia, or the United States.

When we talk about marketing in Canada, we are not in the business of trying to attract people from one province to another province. Our basic approach in marketing Canada is to create an awareness in Canada of products that are available in this country; to encourage people to stay at home, rather than continue to go to the U.S. or other markets to find the same products.

We run an umbrella program to create a greater awareness of what is available in Canada. The provincial marketing agencies, or the cities underneath them, run their own programs to attract people from different parts of the country to their own territories. So 7% of the funding we use in marketing goes into Canada. Basically, it is an umbrella program to create a greater awareness of what Canada has to offer Canadians, so they may pick us as a destination, rather than seeing the outflow of their money to other destinations, particularly the U.S.

[Translation]

Mr. Pierre Brien: I would like to have a point of technical information. Are you talking about 7% of your entire budget or 7% of your marketing budget?

[English]

Mr. Terry Francis: It is 7% of our marketing budget. It's approximately $3.4 million.

[Translation]

Mr. Pierre Brien: Very well. Is Attractions Canada accountable to the Canadian Tourism Commission?

[English]

Mr. Terry Francis: No, it does not.

[Translation]

Mr. Pierre Brien: To whom is this organization accountable?

[English]

Mr. Gerald Bailie (Executive Assistant, Office of the President, Canadian Tourism Commission): I believe it's the Canadian Information Office; I'm not 100% sure.

[Translation]

Mr. Pierre Brien: This brings me to my other concern. So there is another player involved in the promotion. Attractions Canada has advertised all over the place, you are going to do likewise and Economic Development Canada as well. This remains within the Department of Industry or the regional agencies. So we have several federal players in this field.

How will the Commission coordinate its activities with those of the other players? And I haven't even begun to speak about provinces and municipalities. How can you coordinate the Commission's activities with those of Economic Development Canada, the Department of Tourism and even the Canada Information Office?

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[English]

Mr. Terry Francis: It is an ongoing challenge and something we have been attempting to do over the last two or three years. We are going to these other agencies to try to coordinate our activities, so rather than making everybody promote the same product, we can time their activities to get synergies between what we do and what they do.

We've had some success in some areas. In other areas, we continue to work on that. We continue to believe that at the end of the day, as long as that funding is there, it's better done in a coordinated fashion, because we are all trying to promote the same thing. So we take efforts with ACOA in Atlantic Canada. We've had discussions with Attractions Canada, and we work with other regions.

Some of the other funding organizations also work with the provinces, and eventually the provinces play in our program. So there are several ways in which we try to get some coordinated effort in place.

[Translation]

Mr. Pierre Brien: At the end of your document you state: “Provinces and territories generally favourable to this kind of entity”. What do you mean by: “Generally favourable”? My supplementary question has a bearing on the Quebec government, among others.

[English]

Mr. Terry Francis: I say “generally in favour” because there are some discussions about the composition of the board. Obviously we have seven seats that represent the provinces and the territories. Some would like to have their own seats. But we are also driven by the fact that we want this to be private-sector-led. That's why the board is balanced the way it is.

There is a desire to have more, but at the end of the day, when you go through the rationale of why we are positioning what we do, there's acceptance in understanding what we're doing, although the desire continues to be there to have both seats. I think generally—that's why I use the word “generally”—there is support and understanding of what we're trying to do, although we don't quite match the desires of all the areas to have their own seats.

In the Quebec situation, Quebec is one of the big partners in the programs we run in the United States and in Europe. They continue to work with us. On most of the partnership things, we have undertaken efforts across this country with all the tourism marketing agencies across the country, represented by the provinces, to bring planning cycles into line, so we can start to talk to each other and get in at the right stage of the plan, rather than picking the wrong time. So we've started that effort.

We've tried to coordinate on where we are going with the Internet, investments, and so on. We continue those efforts with Quebec, as we do with the other provinces as well.

The Chair: Thank you.

Mr. Malhi, please.

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

Why are there more private sector directors than public sector directors?

Mr. Terry Francis: I think when the SOA was created in 1995 and the funding from the government was increased from $15 million to $50 million, part of the mandate was that the organization should be private, research-driven and industry-led. That's why the composition of the board reflects that.

There is a diverse representation at the board level from the private sector right across the country, which brings into play a lot of the people who generate and make tourism products. So we get to hear the voices of the small and medium-sized businesses as well.

Mr. Gurbax Malhi: Will the new commission differ from the current one, with respect to human resources and staff relations?

Mr. Terry Francis: From the human resources side, as I said earlier, the employees will come in under the Canada Labour Code, so that's a change. Of course, once we've gone through the process and agree it's successful, in the process of going to a crown corporation we will start the negotiations to put that into place.

Mr. Gurbax Malhi: So what assurances will be given to the current employees of the commission that they will have job security with the new corporation?

Mr. Terry Francis: We have made commitments that we will make reasonable job offers to all the permanent staff that are onboard at the time we go to a crown corporation. We've also guaranteed them their jobs for two years. The rest of the process, in order to get the actual employment conditions and so on, is something we'll negotiate under the Canada Labour Code as we go along.

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

Mr. Cannis.

Mr. John Cannis (Scarborough Centre, Lib.): Thank you, Madam Chair.

Thank you for the presentation, gentlemen.

Mr. Francis, I like the way you use the word “generally”, and I agree with you. I wonder if you could take just a couple of moments and elaborate on the relationships with the provinces. It's been discussed at times that this initiative will infringe on provincial jurisdiction, provincial responsibility. It's my understanding that a very cooperative, congenial relationship has unfolded to bring this commission to where it is today. Am I correct in saying that?

Mr. Terry Francis: I believe you are. When you're partnership-driven and have more discussions, thereby building more relationships, you understand each other's plans. Research has shown that as the industry has become more competitive, the Canada brand has acquired significant value.

If you're a province of this country going into a new market, you don't get the same feel because people don't recognize it as easily as they do Canada. But when you include the Canada flag and the Canada brand, they get the recognition and are then able to promote their own regions and provinces under that. So recognition of the brand has been the most significant change, and we are now truly a partnership; they don't see us as conflicting.

As we start to determine strategy, and they start to determine strategy on which markets or segments we should go after, the greater the overlap we have between our two plans, the greater the opportunity for us to cooperatively put our money together and build greater critical mass in order to promote Canada within that marketplace.

Mr. John Cannis: Just to continue on that thought, when it comes to tourism development within a specific province or region, the Tourism Commission—and correct me if I'm wrong—is not really geared toward tourism development programs; they mostly support the development of such programs within a provincial jurisdiction.

Mr. Terry Francis: We have the responsibility for marketing programs and getting product suppliers market-ready. For example, we run product club programs where we take ski groups across the country and encourage them to come together as an industry. Then we can take skiing and promote it out of Canada. That makes it more affordable and gives them access to markets, rather than each individual trying to do it on their own. So from that standpoint, we continue to encourage product suppliers to come together under loose consortiums, pool their money, and partner with us in order to get to markets.

We don't participate, in a financial way, in the development of any of the products. That is not part of our mandate.

Mr. John Cannis: My last question is on how we market Canada abroad, and through what efforts, for example. My colleague, Mr. Brien, quoted a figure of $3.4 million, or 7% of the marketing budget. Is that figure for promoting Canada abroad?

Mr. Terry Francis: No. The 7% is the percentage of the marketing budget we use to promote Canada in Canada. So we put in $3.4 million and attract a partner. In the past we attracted GM or Chrysler and were profiled in their ads. So with our partnership money, we end up spending about $8 million in Canada for Canada. The rest of the money goes abroad.

In order to ensure we were successful in our tourism program, we might partner with two wholesalers who had not sold Canada before. We would get into their programs and encourage them to put Canada in their brochures and product lines. We would use direct mail with a pre-defined qualified list; advertising in newspapers and magazines, and in some cases television, if the partner so desired; and some events where we could bring people over here to actually see the product, test the product, and get a greater feel for what we had.

Mr. John Cannis: Do we use our missions and embassies abroad, etc., as conduits to getting to Canada?

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Mr. Terry Francis: We do, although we have over the last few years...the tourism people who were in the missions now report to us directly. But they do work with the missions, because the missions see that as creating the image of Canada. So there are some cooperative ventures going on there as well.

Mr. John Cannis: Thank you very much.

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

[Translation]

Mr. Brien, have you any more questions?

Mr. Pierre Brien: Let me come back to Attractions Canada. How is it that the Canadian Tourism Commission is not managing these programs?

[English]

Mr. Terry Francis: Because we weren't given the authority. The funding does not come from the same place. They work in a different part of government, and I think their mandate was a little different from ours.

[Translation]

Mr. Pierre Brien: We could invite its representatives. I would be interested in hearing them, but you must be aware of their mandate. How does their mandate differ from yours?

[English]

Mr. Gerald Bailie: I think their mandate is different in that it's a little less focused than ours. As Mr. Francis says, everything we do is research based, and we've researched the Canadian market and identified the segments of the market that are more inclined to travel outside the country. Those are the people we target our domestic ads to.

Attractions Canada, if I'm not mistaken, has a more general, broad-based approach. You see their advertisements particularly on outdoor signs and on the weather channel. They're much more broad-based in their marketing efforts, and they're less focused. They also don't have what I would call a price point. They're not selling particular packages. They don't have a travel agent whom you can take up the 1-800 number to phone and get packages from. So they lack that sort of link for the consumer—once he's made the decision to travel in Canada, where does he go to buy the product?

As I say, we're not involved because, as Mr. Francis says, it's a different group from us, a different funding base. We have had some programs where we've cooperated with them. I'm not sure if we're cooperating with them at the moment, given our mandate and their mandate.

[Translation]

Mr. Pierre Brien: From the taxpayers' point of view, don't you think that the left hand apparently does not know what the right hand is doing?

[English]

Mr. Terry Francis: I'm not sure I would go that far. I think that—

[Translation]

Mr. Pierre Brien: I understand that that is not your role.

[English]

Mr. Terry Francis: I would say if you look at what they are doing, you'll see they are taking specific activities or specific tourism areas and trying to highlight them across the country.

We don't do that. We don't, for example, take a specific tourism product that is in Quebec and try to market it in B.C. Our promotions are more price-point driven to actually encourage people to book.

We just create an awareness for Canada. If you want to go adventure in Canada, here's the adventure product coast to coast, and we get tour operators underneath who actually sell specific packages that would do it.

So it's a little different from what they do, and to the extent that we think we can put the two moneys together and get more, that's what we are trying to do in our cooperative arrangements, trying to deal with them. We don't see it as much of a conflict.

[Translation]

Mr. Pierre Brien: So I will put my question in a slightly more cunning manner. If the Minister proposed to give you back that money, would you refuse? Would you say that the way things are done today is more efficient or would you be interested in integrating that and in being responsible for managing the money of Attractions Canada if it were possible?

[English]

Mr. Terry Francis: Well, I would never say no to any offer to give me more money. I'm not sure we would have to adjust our mandate, but I think we could find ways to make the two complementary. I think they are complementary, but we need to get the timing more coordinated.

[Translation]

Mr. Pierre Brien: Do I have any time left?

The Chair: Yes.

Mr. Pierre Brien: When the Commission intervenes, do you provide money to improve or build a site? Do you intervene in this way?

[English]

Mr. Terry Francis: No, we do not.

[Translation]

Mr. Pierre Brien: Do you intend to do any?

[English]

Mr. Terry Francis: We have no intention of doing that. The board doesn't see that as our mandate, and frankly, we don't have the resources. We think that's a development side that is better handled elsewhere from our shop.

[Translation]

Mr. Pierre Brien: During the debate on second reading in the House, it was said that you were not going to get involved in tourism expansion activities. Where do your interventions end with regard to those of provinces and others? How do you view provincial intervention? What is the role of provinces in tourism in relation to yours, and how is it all done while respecting the different mandates? Where does your intervention stop with regard to a province and the respect of the different mandates of two government levels?

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[English]

Mr. Terry Francis: I think our mandate and our strength is that we promote the Canadian brand. It's an easily recognizable thing. We promote Canada in destinations, and people can associate with Canada. If a province goes on their own, they're not as easily recognizable within markets. We create the umbrella that creates the interest in Canada. The provinces come under that umbrella and then sell their particular jurisdictions and products. I think the two then fit. So it's not really where we start or where they end. It is who creates the brand for Canada and the desire to pick Canada as a destination, and then people come underneath that and specifically sell regions of the country to the various segments. In Japan we create the images of Canada, and underneath that we would get P.E.I. selling Anne of Green Gables and Quebec selling their province. In a coordinated effort over there, the consumer gets a chance to say, I'm going to go to Canada and these are the attractions I can see while I am in Canada.

The Chair: Mr. Lastewka, please.

Mr. Walt Lastewka (St. Catharines, Lib.): Thank you, Madam Chair.

I am looking at your total program expenditures. The core funding is provided by the federal government. Is that correct?

Mr. Terry Francis: That is correct.

Mr. Walt Lastewka: The private sector and the provinces' and territories' budget is lumped together. Could you separate those for me?

Mr. Terry Francis: With regard to the partner revenue, if you take the year 1999-2000, I would say that about 48% of that comes from the provinces and the regional marketing agencies and the rest comes from the industry. When I say provinces and regional marketing, some of the private sector is coming through them as well because they have created their own partnerships. But that's basically where the split is.

Mr. Walt Lastewka: Are you saying that the industry gives about 25% of the funding?

Mr. Terry Francis: Are you referring to the $159.6 million?

Mr. Walt Lastewka: I'm just trying to separate federal and provincial money, and I don't care where it comes through, and private sector money. I'm trying to get the answers to those two other....

Mr. Terry Francis: In the partnership it's 40% of public money and 60% of industry, and then when you take it up to the total spending, you're right, that number drops to around 25% or 30%.

Mr. Walt Lastewka: So the provincial and territorial part of the total funding is about 20%.

Mr. Terry Francis: Correct.

Mr. Walt Lastewka: That's why when you look at how many directors should come from where, the unevenness is that the funding is federally dominated but not the directors. Is that right?

Mr. Terry Francis: That's correct.

Mr. Walt Lastewka: We've had a few bills where we have created new agencies and new things, and I read the same thing about operating in a more businesslike manner. Was there anything that stopped you from operating in a more businesslike manner in the past?

Mr. Terry Francis: I think just the processes we go through. For example, in the contracting process there is no ability to recognize proprietary, innovative proposals that come to you. Basically, under the contracting rules today, if you came to me with a proposal, I would have to go and shop it and get three quotes on it before I could sign the contract. That doesn't lend itself to a businesslike arrangement, because these things are proprietary. If someone comes with a good idea, we can do it under a long process, but it takes too much time. From the standpoint of the ability to handle a proposal and the time it takes to actually complete the proposal, it is less than desirable.

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Mr. Walt Lastewka: Thank you.

The Chair: Thank you.

Mr. Pickard.

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

From a layman's point of view, I would think your ability to market within Canada is very high. As a matter of fact, from my perspective at least, I would think you would do better marketing Canada to Canadians. Yet you suggested, I believe, that 7% of your budget is used for internal promotion. Is there a reason such a small percentage is used for internal promotion instead of a larger percentage to maintain the Canadian market in Canada?

Mr. Terry Francis: As we look at where the money is spent in Canada, a huge amount of money is being spent by the provinces and cities around the country that promote within Canada and are selling within the 300- and 400-mile radius. We weren't sure that putting incremental money there would get us the same return, because we think they are doing a good job, generally. We're just helping in creating the umbrella. To a certain extent we've been a catalyst in getting them to spend more money attracting Canadians. Also, from the standpoint of spending, how much money is spent by visitors to Canada—

Mr. Gerald Bailie: Of the $50 billion, $35 billion is Canadians spending in this country. Most of the industry is driven by the domestic market, and, as Mr. Francis says, the provinces have been handling that market for the most part.

We are trying to handle the part that's interested in going outside. The real nub of the answer, though, is that it's better for us to spend our money to get new money coming into the country. In other words, for the 15 million Americans or the 4 million overseas travellers who come into this country, it's better for the federal government to promote those people coming into the country and bringing new money into Canada.

Mr. Jerry Pickard: Thank you. That makes a lot of sense. I didn't realize the conflict there, and that helps out a lot.

How do you target your foreign markets?

Mr. Terry Francis: We go through a statistical analysis and look at what is the total outbound travel in a market. We look at the analysis that says, out of the total people coming out of, let's say, Japan, how many of them fit within the product line we have? Obviously, a lot of them will want to go to Las Vegas, and we won't attract them, but we go after the 55- to 65-year-olds who want tourism and scenery, and we pick the right magazines to go after them. In Japan there are the office ladies. Those are the ladies 45 years and over who are also big travellers, and we'll go after them.

So we do an analysis out of each market. What is the profile of the traveller? What are they looking for? We are, of course, now trying to find a way of positioning ourselves with our product so that we can go after segments we haven't had before, because we've been comfortable with the segments we've had. But each market has enough of a profile for you to go and measure the opportunity within those markets.

Mr. Jerry Pickard: What percentage of your budget do you use to target areas and clarify the travelling public fitting into the packages you have? Is it a large percentage of your budget?

Mr. Terry Francis: Our research budget would probably be around $5.5 million to $6 million, which is a combination of everything—

Mr. Jerry Pickard: Is it about 3%?

Mr. Terry Francis: Yes. It involves identifying the opportunities but also measuring the effectiveness of what we've done so that if it hasn't worked, we can shift it to a different area. Also there's the macroeconomic research of the change in the dollar and what that means for demand and a competitive analysis—if, for instance, Asia is selling at this price, what effect it's going to have for you and so on.

Mr. Jerry Pickard: Do you have internal staff who do that?

Mr. Terry Francis: We have internal staff who do a large part of it or write the specifications of the research we want, and then we'll contract it out. Statistics Canada provides us with a lot of that information so that we can do it ourselves. The other ones we have to buy in the marketplace. It is also partnered by a lot of the other operators, so the provinces, the airlines, or the hotel companies that are also interested in the data will invest with us as we go to get that data.

Mr. Jerry Pickard: Do you have other support mechanisms that would help in that area, for instance, a Canadian crown corporation? Do you consult with Canadian Airlines, or Air Canada today, and with other branches of Canadian business and travel and the Canadian government?

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Mr. Terry Francis: Absolutely. For the airlines, for example, one of the things that we participate in is the exit surveys. When people are leaving the country and the airline wants to do surveys of the customer, we will try to get questions that ask: What did you like about our country? Did you realize the value of the dollar? Will you come back? If you do, where would you like to go? So we are piggybacking on other research in order to get the information we need for ourselves.

Mr. Jerry Pickard: Finally, what is the estimated dollar return you think you bring into Canada in comparison to your expenditures, your total budget? Do you have any idea?

Mr. Gerald Bailie: I don't think we have a number like that off the top of our heads.

Mr. Jerry Pickard: Do you have any kind of—

Mr. Gerald Bailie: We could send you some information. We have done some estimations of the amount of money we spend in a market and how much that market gives us. It varies on the type of traveller. If we're getting more business travellers from a certain market, that might be a higher number than if we get more VFR, visiting friends and relatives, or pleasure travellers, but we have those calculations.

Mr. Jerry Pickard: Then repeat business would be very important.

Mr. Gerald Bailie: Very important.

Mr. Jerry Pickard: I suppose repeat business wouldn't show in your initial numbers, but it would be interesting to have an idea. We're spending a fair number of dollars here in trying to attract business. What business are we attracting and what kind of repeats come from the markets you are approaching and moving forward?

Mr. Terry Francis: We usually work with people in the marketplace who are in the business of promoting travel, and as they dissect them themselves to find out how much is repeat and how much is new, and therefore the cost of investment for the new, that information is available. So we don't have to spend money to get it. It just takes time. We wait for them to finish their analysis and then we can get that information. Particularly in the Asian markets and European markets, that information is available.

Mr. Jerry Pickard: Thank you, Madam Chair.

The Chair: Thank you, Mr. Pickard.

[Translation]

Mr. Brien, have you any further questions?

Mr. Pierre Brien: Your current employees will be subject to a new law once the Commission has been created. The status of these employees will change. Can they choose to remain public servants or do they have to go with you and be subject to the Labour Code?

[English]

Mr. Terry Francis: I believe that when we give them a reasonable job offer on the date of proclamation, they have 60 days to decide whether to stay with the commission or go back into the public service.

[Translation]

Mr. Pierre Brien: Thus, they can remain as public servants.

Mr. Terry Francis: Yes.

Mr. Pierre Brien: How will new employees be hired?

[English]

Mr. Terry Francis: We'll go through a recruitment process to try to attract the skill sets we need. We'll look at the industry and advertise in different areas to try to find the right employees.

[Translation]

Mr. Pierre Brien: Do you anticipate that many employees will want to remain in the public service? Have you already begun preliminary work on that?

[English]

Mr. Terry Francis: We haven't started work on recruitment, and my anticipation is that a majority of the employees will stay with the commission. There are different factors coming into place, time for pension and the different age groups, that may drive that decision, obviously, but my expectation is that a majority of them will choose to stay.

[Translation]

Mr. Pierre Brien: Once the Commission has been created, it will be more autonomous, more independent. Often, in these circumstances, there is a tendency toward expansion. For instance, do you intend to move to other premises in the short, medium or long term?

[English]

Mr. Terry Francis: We have no plans to move the commission, and besides, I think if we did we'd have to go back for an Order in Council to do that. So our headquarters for the commission is expected to stay in the national capital region.

[Translation]

Mr. Pierre Brien: I think that that will do for now. Madam Chair, I have finished my questions, but please note that I would like us to invite people from Attractions Canada in the future, those who manage the program. I have several questions to put to them regarding the Commission. I would like to ask the people in charge of Attractions Canada the same questions that I asked the people from the Commission. Please take note of this.

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[English]

The Chair: Mr. Brien, we'll see what we can do before Thursday, but when we asked for witnesses we didn't get them and we've scheduled the meetings for this week. But we'll see what we can do.

[Translation]

Mr. Pierre Brien: Yes, but sometimes, by putting questions we see that further questions may be required. I would like to hear the version provided by Attractions Canada.

[English]

The Chair: We will. The clerk is going to undertake that as soon as we leave this room to see how we can accommodate that request.

[Translation]

Mr. Pierre Brien: Very well.

[English]

Mr. Jerry Pickard: Mr. Brien, if you sent some of those questions in writing, you might be able to get those answers without having extra witnesses if we don't have the time.

The Chair: We'll have to see. We'll get the clerk to contact the officials and see what we can do, what's more efficient, more expedient. Thank you for that suggestion, Mr. Pickard.

I have one quick question regarding clauses 15 and 16, where it talks about remuneration and fees. Can you please explain to me why the president is being paid a remuneration and the chairperson and the private sector directors are being paid fees? What's the difference? Is there a difference that explains why we're using two different terms? Why are there two different clauses? I'm just trying to get some clarification.

Mr. Terry Francis: I'm not sure what you're referring to.

Mr. Gerald Bailie: Are you talking about the bill?

The Chair: I'm talking about the bill.

Mr. Terry Francis: I think the chair and the directors are not full-time—

The Chair: The chair and the private sector directors are not full-time and the president is full-time.

Mr. Terry Francis: The president is a full-time employee.

The Chair: If I understand correctly, you're the president right now?

Mr. Terry Francis: Right now.

The Chair: I understand, I think.

That was my only question.

No other questions? I want to thank you very much, Mr. Francis and Mr. Bailie. The meeting is now adjourned.