Proceedings of the Standing Senate Committee on
Social Affairs, Science and Technology

Issue 19 - Evidence

The Standing Senate Committee on Social Affairs, Science and Technology, to which was referred Bill C-5, to establish the Canadian Tourism Commission, met this day at 3:50 p.m. to give consideration to the bill.

Senator Michael Kirby (Chairman) in the Chair.

[English]

The Chairman: Honourable senators, we are here to discuss the issues surrounding Bill C-5, an act to establish the Canadian Tourism Commission.

Our first witness is Mr. Jim Watson.

Mr. Jim Watson, President, Canadian Tourism Commission: I cannot attest to the fact that this is a brief opening statement, but I know that if I go on too long, you will make it a brief one.

[Translation]

I am very pleased to be invited to appear before you today. I am here to present an overview of the Canadian Tourism Commission's transition from a special operating agency to a Crown corporation.

[English]

Joining me at the table are Roger Wheelock, vice-president of marketing for the Canadian Tourism Commission, who is delighted to be in the Victoria Building because he hails from Victoria; Irving Miller, senior counsel from Industry Canada; Chantal Péan, director of corporate and industry affairs for the commission.

Today I would like to discuss very briefly three main points: the reasons why the commission was created in 1995, what the commission has done for Canadian tourism over the past five years, and...

[Translation]

...and why the time is right for Bill C-5, establishing the Commission as a Crown corporation.

[English]

The context for setting up the commission is the first topic. Last week you may have noticed the front-page article in the Ottawa Citizen which was also published in newspapers in Halifax, Calgary, Victoria, and Winnipeg that indicated that Canada had just been voted the world's best country to visit by British readers of Condé Nast Traveller.

In recent years, we have become used to high praise from an increasing number of visitors, but the landscape was not always so sunny. As recently as the early 1990s for example, the Canadian tourism industry was in serious difficulty for a number of reasons. The North American recession, with climbing unemployment and interest rates, led to a sharp deterioration in the U.S. travel market. Limited air access to Canada affected emerging Asian markets, as well as established markets in the Americas and Europe. The building spree of the 1980s resulted in too many facilities for the decreased demand, with consequential low returns on investment.

Governments at all levels were cutting back support for the industry -- federally from $35 million annually in the 1980s to $15 million in 1992-93.

[Translation]

All of these contributed to large operating losses in the airline and accommodation sectors.

[English]

As Senator Callbeck reminded senators when she spoke to the bill in June this year, Canadian efforts to market Canada as a tourism destination before the commission was founded were fragmented among many players -- the federal government, provincial and territorial governments, and the tourism industry itself. Since it had no say in policies, the tourism industry was reluctant to form partnerships with the federal government. The result was a lack of coordinated marketing and product-development programs, further undermining industry growth. By 1992, the tourism deficit had grown to nearly $6.5 billion annually. This represented nearly one-quarter of Canada's current account deficit and definitely caught the attention of both the previous government and the current one.

[Translation]

The Prime Minister then decided to appoint the Honourable Judd Buchanan as his special advisor on tourism. Mr. Buchanan was to recommend action to increase tourism revenues, generate tourism industry employment, and reduce the travel-account deficit.

[English]

His industry-wide consultations led Mr. Buchanan to conclude that what had been lacking was a structure through which all elements of the industry could provide meaningful input into the development and execution of marketing plans. He also concluded that the industry was willing to contribute significantly to the financing of marketing activities in return for being able to participate in the design and execution of those activities.

[Translation]

His major recommendation was the creation of the Canadian Tourism Commission, with a board of directors representing all stakeholders.

[English]

The greatest advantage of the new commission would be the participation of industry as full partners in jointly developed and jointly funded programs. Through this participation, the commission would become the catalyst for industry cooperation and collaboration, thereby overcoming one of the major flaws of past efforts.

When we look at the accomplishments of the tourism industry in Canada after only five years' experience with the commission, the statistics are indeed very impressive. Naturally we cannot say that the commission is responsible for the complete turnaround in the industry, because that has largely come from the hard work of the people who deliver the products, and, obviously, from a worldwide, positive improvement in economic conditions in major tourism markets. However, the commission has directly helped to create a climate of working together at all levels. It has served as a spark and catalyst for cooperative marketing and for new products based on sound research and analysis. It has served as a focus for debate, for industry intelligence, and for level-headed strategizing.

Comparing 1999 figures with those for 1995, just before the commission was established...

[Translation]

Tourism is now a leading growth sector in the economy, generally rising faster than the growth of the Gross Domestic Product.

[English]

Total tourism revenue for 1999 was more than $50 billion -- up by 25 per cent since 1995. The travel deficit has decreased to $1.7 billion -- down nearly 50 per cent from $3.3 billion in 1995. Tourism is producing new employment at a faster rate than the overall business sector.

[Translation]

Domestic tourism has increased by 20 per cent, which also helps to reduce the travel-account deficit.

[English]

We have improved our standing in the fiercely competitive international tourist market, moving up from 11th to 7th place as a tourism destination according to the World Tourism Organization.

As for the commission itself, the latest third-party evaluation from Price Waterhouse came to some telling and, I am pleased to say, very favourable conclusions. There was consensus among the partners that they were now able to do things that would not otherwise be deemed affordable, and they felt that being associated with the commission gave them broader audience coverage and broader exposure geographically.

They are better able to leverage existing dollars, and they are able to be involved both in media and in programs that they could not normally afford. The commission has created a climate where competitors can make a larger impact in a market by jointly taking their products into that market.

[Translation]

The commission's efforts have created a heightened presence and awareness for Canada in international markets.

[English]

Association with the commission lends credibility to product offerings and less well-known organizations, and smaller firms benefit from the commission's resources in marketing intelligence and research, marketing and media expertise, and human resources.

The final point I wish to raise is the commission as a Crown corporation. The commission has certainly earned its stripes over its short history as a special operating agency. I should like to conclude with some observations on why the time is right for the proposed legislation before you to establish the commission as a Crown corporation. When the commission was formed, the Prime Minister urged the organization to get up to speed and move quickly. The fastest way to do that without missing a year in the market was to form a special operating agency.

[Translation]

The board and the Minister of Industry, the Honourable John Manley, recognize that this was never a final decision. It was simply the best way to get going.

[English]

With five years of operations behind it, the commission now needs much more financial and strategic flexibility if it is going to respond to the needs of an ever-changing marketplace, and if it is to continue to be a truly effective partner as tourism grows in Canada.

Current federal legislation governing departments and special operating agencies such as our commission places substantial limitations on what can be done. There are limits on entering into contracts, on partnerships, and on managing finances and human resources. The only way around these limitations is to make the commission a Crown corporation that will have the legal mandate to operate more effectively, efficiently, and with greater flexibility.

The commission does not own or operate tourism facilities. It is a marketing agency and, as such, it needs to use modern, streamlined business practices to enter into partnership contracts and manage funds for joint undertakings. It needs the authority to keep funds year over year. Although there are administrative means of rolling over some money from year to year, these methods are cumbersome for the commission; its needs would be better met, in our opinion, as a Crown corporation. It needs authority to keep the revenues that it makes through merchandising. These revenues currently become part of the government's Consolidated Revenue Fund, when they could be reinvested in tourism marketing programs.

The commission needs authority to open bank accounts, including local accounts in foreign countries to pay locally engaged staff and marketing contractors. Under current restrictions, these accounts can only be paid either through the Department of Foreign Affairs and International Trade, or by cheques on Canadian accounts in Canadian funds, which can lead to delays at some foreign banks.

I scarcely need to emphasize that the essence of the Canadian Tourism Commission's success lies in its ability to form partnerships between the private sector and governments. All provinces and territories, and hundreds of businesses, have joined forces with the commission over the years.

[Translation]

Private and public sector partners have contributed so significantly to the financing of the commission's activities that the original projections for their contributions consistently exceeded the federal government's core funding.

[English]

The private-sector component of the commission remains at the core of its operations. Private-sector-led committees are responsible for individual program areas.

I should like to mention, Mr. Chairman, that the private sector and the commission's board of directors support this proposed legislation. If adopted, it will mean that Treasury Board will no longer have to create special, precedent-setting instruments for the commission to conduct its business.

Tourism is of great significance to each of the provinces and territories, and to most large cities and smaller rural communities. It is, of course, of primary concern to the thousands of investors and operators and the more than 500,000 Canadians who work in this sector. Because tourism is of such critical importance to these people and to other governments, Crown corporation status will make the commission one of the pivotal partners in the industry -- the partner that has the mandate, the means, and the resources to contribute to the overall well-being of the entire industry for the benefit of all Canadians.

As president of the Canadian Tourism Commission, I am looking forward to this evolution in its affairs and to the positive contributions that the commission will continue to make as a catalyst for jobs and economic growth in an expanding and important sector of our economy.

My officials and I would be delighted to answer any questions you may have.

The Chairman: Mr. Watson, I should like to ask you one general question about the board. Aside from you and the chair, your board is comprised essentially of nine so-called "private sector" representatives and seven appointed by provincial and territorial governments.

Are the seven appointed by the provincial and territorial governments allocated regionally? Is the intention that there would be, for example, two from the Atlantic region, one from Quebec, one from Ontario, two from the West, and one from the North?

Mr. Watson: Yes, that is the principle. For instance, the current deputy minister of Tourism from P.E.I. is one representative. When we have a public-sector representative from that province, we will have a private-sector tourism operator from Nova Scotia on the board.

The Chairman: Therefore, in the Atlantic provinces, as an example, you would have two public and two private representatives, in fact one per province. You are saying that the attempt would be made to make that into one per province.

Mr. Watson: Yes. In fact we have one from each province in the Atlantic. We have the deputy ministers of Tourism from Newfoundland and P.E.I., and a private-sector operator from each of New Brunswick and Nova Scotia.

The Chairman: Of the nine private-sector representatives, seven are regionally allocated and two are not. What kind of people fit that criteria?

Mr. Watson: One of the individuals is the president of Inniskillen Wines from Ontario. We have representatives from both non-scheduled and scheduled airlines. There is currently a vacancy on the Air Canada seat.

Senator Banks: Air Canada has a vacant seat?

The Chairman: Obviously you do not fly as much as we do. There is no such thing as a vacant seat on any Air Canada plane these days. That is a subject for another committee.

Senator LeBreton: Mr. Watson, may I congratulate you on your appointment. Certainly those of us from the Ottawa area know full well of your tireless enthusiasm and your extreme commitment to anything you undertake.

Will you outline exactly how you will work with the private sector? How will you prevent a situation of "who's on first," so to speak? Perhaps some organizations in the private sector will think that they do not have to move into a certain area because they envisage that the Canadian Tourism Commission will handle that specific area and will promote tourism. How will you sort out, among your organization, the provinces, and the private sector, the responsibilities that each will have?

Mr. Watson: We have had tremendous success in attracting the private sector to the table for a couple of reasons. Primarily, we have been able to give them a meaningful role in the decision-making process. Over half of our board is from the private sector, but more important, 100 per cent of the various committees of the CTC are made up of representatives from the private sector.

To give an example, we have committees based on our geographic marketing programs.

We have a European committee and an Asian committee. All of the people on those committees are private-sector representatives who either volunteer or sit on a committee at our request. Therefore, the decisions reached on the number of dollars spent on advertising for Europe, Asia, the U.S., or Canada are made by these committees and recommended to our board of directors. We have had fairly good success in reaching consensus among the private sector and the other public-sector partners.

The other reason, to be perfectly crass, is that we bring some money to the table. When the provinces want to conduct a marketing campaign, we can partner with them. We not only bring expertise in research and advertising, we also help by putting some federal dollars into a provincial program -- for example, in Nova Scotia, Quebec, or British Columbia.

Senator LeBreton: In determining your marketing strategy for bringing tourists to Canada, what percentage is still by the so-called "rubber traffic" -- coming by car or bus? Knowing that figure, is there a more targeted effort by the provinces and the private sector to go into those markets in the northern part of the United States where there are huge populations?

Mr. Watson: We will get that figure for you. The vast majority of tourism dollars spent in Canada are by Canadians travelling within their own country. Our next biggest market is, of course, the United States. We do not have the percentage right now coming from vehicle versus train or airplane.

Senator LeBreton: Do you get down to that kind of detail at the commission? Do you actually work with the private sector, or do you leave that up to it and the provinces? Are they the ones who bring that data to you, rather than your focusing in on that particular market in terms of attracting tourists to Canada?

Mr. Watson: It is a combination of efforts. We do a great deal of work with Statistics Canada on border entry data, so that we have an exact count of the number of people who come across any border. Those figures are provided to us in partnership, and we actually help fund that particular study. That material is then shared with the provinces and with the private sector, so that marketing decisions are based on research. We also have offices in, I believe, 12 countries around the world and they are providing information to us. I am proud to say we have become a leader in market research simply because we have been able to work with Statistics Canada -- which is viewed as a world leader by the international community -- to provide accurate information on people coming back and forth across the border. We can give you specific figures as to the number of people who have come from a particular country and at what time of the year. If trends develop that show that we seem to be getting a lot more people coming from Germany in July and August and they seem to be heading to the Far North, we can then analyze the reasons for that. More importantly, we can analyze the numbers such that we know when there is a decline in the number of people from a particular country and can shift our marketing dollars around.

Senator LeBreton: It is fair to say then, that you could be the leader in establishing the trends and setting the industry -- private sector and the provinces -- off in the right direction. You can see these trends, so you take a very strong leadership role, rather than simply reacting to suggestions or myths that they may be operating under. You can actually use the data from Statistics Canada. Hence, you set the agenda rather than react to it.

Mr. Watson: That is right. Our vice-president of marketing may want to add to that.

One point I neglected to mention was on your previous question vis-à-vis the money that we spend. Our policy is that any money we spend has to be partnered with the private sector. In fact, while the federal government provides us with $75 million on an annual basis, last year I believe we received $82 million in partnership -- either in funds, in kind, or by joining with their marketing campaign. We are quite proud of that, and it certainly allows our $75 million to go a lot further.

Senator Banks: I hope, Mr. President, that you are not missing being referred to as "Your Worship."

Mr. Watson: I decided that people were starting to call me "Your Washup."

Senator Banks: I note that the objectives include sustaining a vibrant and profitable Canadian tourism industry. I assume that a large part of that is through marketing. I also assume that you may have had a chance to read the provisions of Bill C-27, the national parks bill, and some of the arguments and motivations that have led to the new definition of "ecological integrity." You may have heard reservations from some people, some of whom are on your board I suspect, about whether or not you will have anything to market. That is an exaggeration, but I would like to refer you to the report of the minister's Panel on the Ecological Integrity of Canada's National Parks, which recommends that Canada immediately cease the product marketing of national parks in general, and the product marketing which attempts to increase overall use of parks or divert demands to so-called "under-used" parks in particular, and concentrate instead on social marketing, policy marketing, and "de-marketing" aimed at an appropriate target audience.

The report further states that the people learn about national parks and national historic sites in many different ways, and fortunately visiting them is no longer the only way to experience their sights and sounds.

I am wondering about the left hand and the right hand here. I do not think the minister actually intends to start denuding the western national parks of their attractions -- accommodations and so on. If such is the case, however, what would be your attitude, and what would be your board's attitude, to the idea of de-marketing -- convincing people not to come here?

Mr. Watson: As a marketing agency, we obviously would not support that philosophy -- an entire de-marketing of the national parks system. For years, for decades in fact, the parks have acted as a magnet, not just for foreign visitors, but for Canadians as well. That is very important to the tourism fabric of this country.

We were very proud of the fact that just last week, the U.S. edition of Time had a two-page article on ecotourism, focusing primarily on British Columbia, but also on Algonquin Park. I suspect that at some point we will be asked for our position. There is no question that it is a divisive issue in the community. There are those who subscribe to the view that parks should be seen and not trampled on. Yet the parks community employs literally tens of thousands of people, and the spin-off -- whether it is Banff or Jasper -- is very important to the economy of those parts of the country. I suspect our board, if formally asked to take a position, would not be supportive of discouraging people from visiting the parks.

Senator Banks: I know that no one in his/her right mind wants to trample on the parks. Everyone who has ever been to our national parks recognizes that certain of them have become "overdeveloped." No one likes that, least of all me. Perhaps there needs to be some de-marketing, but I am wondering about the tension that might develop. I guess I am asking you for a personal opinion.

If it were to become the policy of Parks Canada to, at the very least, de-emphasize marketing, or actually de-market, to reduce traffic within some areas of the national parks, how would the tension between that and the interests of your board be resolved?

Mr. Watson: We might have to go to the UN for mediation because it would be a very divisive issue. I would like to ask Mr. Wheelock, our vice-president of marketing, to comment, because obviously, as I indicated, when a marketing organization such as ours hears the word "de-market," we have concerns about that.

Mr. Roger Wheelock, Vice-President, Marketing, Canadian Tourism Commission: Yes, it is a very challenging issue for us, but we are actually working with Parks Canada at the moment. They have various mandates, one of which is ecological integrity, which is supremely important to the preservation of that wonderful resource of ours. However, they have other mandates as well. Commemorative integrity is important. One of the attributes of Canada is an authentic travel experience, and that is recognized worldwide. The parks are our icons.

We must be sensitive to the issue of overuse in the parks, particularly in the high season in the main icon parks. We are also working with Parks Canada, perhaps not to de-market, but to market in a more sensitive way. We want to use the idea of learning travel, which is a very "hot" travel motivator at the moment, to communicate that we do not wish to cease marketing the parks, but to market them to an audience that will be appreciative and respectful of them, in order to assure their continuity.

That issue is not exclusive to parks, where it tends to be the focus because of their fragility, but extends also to national historic sites. Some of those, in addition to more focused marketing, will be advantaged by a broader marketing effort across all seasons as well.

Part of our issue in marketing parks is the length of time they stay open. Perhaps if we could keep them and some of our historic sites open longer, we could spread the load a little better, to the benefit of everyone, and respond to our four-season mandate for marketing Canada generally.

Senator Banks: Such marketing may be compatible, even in the mountain parks, which are already open 365 days a year.

I would like to bring to your attention the remarkable statistics on people who come to Canada specifically to attend cultural events. I urge you to take advantage of that. Although most Canadians do not know this, Canada has become a magnet for people wishing to attend cultural events of all kinds. I hope that cultural marketing will be an important and integral part of your efforts worldwide.

Mr. Watson: I agree with you wholeheartedly, senator. We have a subcommittee on cultural tourism at the Canadian Tourism Commission. In fact I was informed by one of our staff only last week that the Federation of Canadian Municipalities, an organization with which I used to deal, is also very interested in promoting culture as a tourism tool, be it through festivals such as the International Jazz Festival in Montreal, or here in Ottawa. Particularly with an aging population, more time and money are being spent on that. Our partners see the benefit of it as well.

I found the statistics for which Senator LeBreton was asking. The number of trips by non-residents from the United States by automobile to June 1999 was 3.6 million. That compares to 475,000 by plane; 218,000 by bus; and 227,000 by rail, boat, and other methods. I am not sure what "other methods" are.

Senator LeBreton: There is an incredible number coming by car or bus -- 3.6 million and 218,000.

Senator Callbeck: I congratulate you, Mr. Watson, on your appointment as president.

I have three questions. A 1997 Treasury Board evaluation concluded that there was a continuing need to increase small-business involvement in commission programs. I raise that because in my province of Prince Edward Island, I have heard the criticism that it is very difficult for small-business tourist operators to become involved in any way with the commission.

What work has been done since 1997 in that regard?

Mr. Watson: A couple of things have been done. First, our board recognized the importance of the small/medium enterprises, the SMEs as we call them, in the tourism industry, because they represent the substantial majority of business opportunities in tourism in this country. As a result, the board has established a permanent SME committee made up of representatives from that sector. They are in fact bringing forward a report to our next board meeting, which will take place in October in Moncton, with a series of recommendations and suggestions on how we can improve our ability to help small and medium enterprises.

We have also developed a computer system called CTX which allows primarily small businesses to partner with each other. It is a national network that has received very positive reviews from the small and medium enterprise community.

We also strive to have small- and medium-enterprise representatives on every marketing committee of the board. We have, for instance, as I mentioned, the deputy minister of Tourism from Prince Edward Island, who is certainly well aware of your constituents' concerns, to try to make us more responsive in the future. I think we have done some tangible things to deal with that.

It is a very difficult challenge. For example, the priorities of a large multinational or national hotel chain are substantially different from those of a bed and breakfast or small marina operator. We must be sensitive to those concerns. We are trying to feature more articles on SMEs in our newsletter, Communiqué, which is distributed to 24,000 businesses. We also have "product clubs," which is a new innovation that allows small businesses to come together and see how they can partner. For instance, the wine industries in the Okanagan and in the Niagara region of Ontario have developed a product club so that the small wineries can get together and work with the Canadian Tourism Commission to market wine tours. The golf industry, which is very important to Prince Edward Island, is another product club. Small golf courses could not afford to market properly on their own, but working in tandem, and together with the CTC, they can.

Senator Callbeck: Mr. Watson, you mentioned having small business represented on the committees. One of the concerns that I heard expressed was the fact that the representatives are asked to serve on committees but their travelling expenses are not covered. I asked members of the commission about that when I was briefed on this bill. The explanation I received was that according to the guidelines for CTC working committees -- approved by the CTC Board of Directors, October 1997 -- "At the discretion of the committee Chair, committee members may be reimbursed for direct travel expenses to attend committee meetings."

Why would it not be policy that they be paid?

Mr. Watson: Well, it is primarily a cost factor. I met with the Nova Scotia Tourism Association and the deputy minister of Tourism two weeks ago, and they raised the issue. The SME committee that is coming forward in October to our board for discussion has also raised the matter. The Nova Scotia government is beginning to subsidize the costs for Nova Scotians who are on committees, so that they can have a voice around the table.

There is no question that it is a difficult issue for us simply because the small and medium enterprises obviously do not have the kind of expense allowances that a large company does. If, for example, the president of Fairmont Hotels wants to go to a committee meeting, he does not have to think long and hard about it, whereas for someone who runs a small bed and breakfast in Victoria, travel to a committee meeting can be a big expenditure. Thus, we try to move our committees around the country.

I know the SME members of our committee met in Whitehorse at one point and that precluded a number of people from attending simply because of the cost involved. It is one of the recommendations that the SME committee will bring forward. Our board will discuss the issue, although I cannot tell you what the outcome will be. However, I can certainly assure you that the representatives on the SME committee are very much of your opinion and your point of view.

Senator Callbeck: I notice from your statistics on major overall markets that Asia is up -- the increase is 3 per cent over, for example, France. Did you spend many more dollars in Asia last year than the year before? Do these figures reflect the promotion and advertising that were done?

Mr. Watson: I will ask Roger Wheelock to comment, who will deal with the marketing. It reflects a number of other things, such as the improvement in the Asian economy. Obviously, a couple of years ago it was substantially damaged because of the so-called "Asian flu." However, Mr. Wheelock will give you information on the marketing dollars that have gone into Asia as a result of the statistics. I believe that you are quoting from the 1999 tourism performance sheet.

Mr. Wheelock: Yes, the Asia meltdown hit us particularly hard, and in fact we actually pulled some funds back, but decided to maintain our presence there and redirect them, as many private businesses did, into the larger U.S. market.

We received additional funds in the past year and we put back another $1 million into that program. Our committee chairs recommend to the board, and all the committee chairs, as Mr. Watson mentioned, are in the private sector. They recommend the allocation of the resources to each of the marketing areas, and you are right that some of the percentage growth out of Asia is particularly strong. However, it is recovering from a very damaged situation. France, on the other hand, has grown significantly, with 3 per cent growth on top of compounded growth -- and the U.K. has the same growth on top of compounded growth. Those markets have been strong for some time.

Senator Keon: Mr. Watson, allow me to congratulate you. I know our country will benefit tremendously from your appointment. I think you are an excellent choice for this job.

You have already partially answered my question. I have felt for a number of years, as I participated in the organization of international scientific meetings, that there was a tremendous disconnection between the overall convention industry and the tourist industry. If a little homework had been done upfront, it would have benefited both sides a great deal. However, people come to and from these conventions and they really have not been properly canvassed as to the excitement they could experience in some areas of Canada. For example, Vancouver benefits a great deal from the boat tours and the nice countryside.

Could you comment on how you see this whole area developing a synergy, and what you might do to improve the synergy?

Mr. Watson: I will ask Mr. Wheelock to answer specifically the second part of your question.

The business of conventions is extremely important to our country and a number of the economies of, primarily, the larger cities, because they actually attract the conventions -- Toronto, Vancouver, Montreal, and, to a lesser degree, other cities that do not have large convention centres. We spend approximately $4 million, partnered with an additional $4 million or $5 million from the private sector, to focus on the U.S. business market. We feel that is obviously our most lucrative market, because it is the closest geographically. We try to attract people both for the business conventions and the incentive travel programs that are very lucrative in the States. Those companies offer incentives to employees or customers for product loyalty, company loyalty, and so on.

We certainly notice that convention travellers spend substantially more money in a particular city in Canada than the recreational tourist because they have expense accounts and are here on behalf of business. We find that people who do come here and experience the beauty, nature, efficiency, cleanliness and safety of our cities want to come back. We need to do a better job, obviously, in encouraging these people to come back with their families as vacationers after they have spent three or four days in a particular city on business.

I will ask Mr. Wheelock to speak, because he can tell you a little more about the meeting and convention incentive travel program of the Canadian Tourism Commission. We are putting more emphasis and more dollars into that particular dossier because we feel that it has growth potential.

We have some concerns about areas that do not have the facilities to accommodate large conventions -- Ottawa is one of those. We are limited really to a handful of cities -- Vancouver, Montreal, and Toronto -- where large conventions can be held. You have been to conventions that could not be accommodated in your own home town or could not be accommodated in, perhaps, Winnipeg or another municipality simply because of a lack of facilities.

Mr. Wheelock: I think Mr. Watson has covered it, but we have capacity issues in the meeting and convention incentive travel market. Partly, we would like to, for example, do much more in the incentive realm out of Asia. However, the moment you deal with a very large convention, you not only have the infrastructure issues that Mr. Watson has mentioned, but there are only a certain number of Canadian cities that can accommodate an event such as our own showcase "Rendezvous Canada."

Our research shows that tourism is projected to continue its strong growth until the year 2010. Some cities will have a distinct challenge in providing space if they are going to remain globally competitive.

Out of Asia, for example, on the incentive market side, we have an issue of simple airline space. If there are 3,000 people expected, it is not easy for any airline to provide that number of assured spaces. For those kinds of markets, you are required to make arrangements a long time ahead. The planners simply must know in advance.

On the positive side, and speaking to Senator Callbeck's concern about the small and medium-sized enterprises, we are noticing more and more a trend toward special outdoor adventures.

We have been quite successful in using ecotourism and adventure tourism as lures to hook the smaller convention and meeting groups. We tell them that we have a great product in Canada and they should come to experience it. Thus, we have been working with the Canadian domestic leisure program, the U.S. leisure program, to use those as lures as well. I think that we are making progress on those very important fronts.

Senator Fairbairn: If you employ the same kind of energy at the CTC that you did at the City of Ottawa, Canadian tourism will really go places.

I have looked at the board and the way in which the membership is distributed. One of the great things about having a Canadian -- a national -- institution involved in tourism, rather than just at the regional or provincial level, is the opportunity to focus interest on certain parts of Canada that are unique. I am curious about why we do not have a representative whose primary focus is the northern areas of Canada, since it is of great interest to people from many different countries, especially in Europe. We have, under the regional representation, one person for the province of Alberta, the Northwest Territories and the new territory of Nunavut. The Yukon, of course, is "attached" to British Columbia for its representation.

I was in the Northwest Territories last week and it struck me, as always, how exceedingly different the north is. It is just a thought, but maybe there ought to be a special focus on those areas.

Mr. Watson: That is a good observation; you are quite correct. The board composition was designed when the CTC was formed about five years ago, and the proposed legislation keeps the board composition, the categories and so on, in the same ratio. We have representatives from the northern territories on a number of our committees -- the research committee, the Canada committee, the industry product development committee, and also the U.S. leisure committee. We believe, notwithstanding the importance of the board and the final decisions that are made there, that the real work of deciding priorities such as where to spend our money in marketing, which is our primary focus, is done at the committee level, and we have representatives on those committees.

I indicated that we have met in the north -- we had a meeting of the small/medium enterprise committee in Whitehorse. I will go to the annual general meeting of the Yukon Tourism Association in Whitehorse. We try, in those areas that actually share one board member, to rotate the members. That way, when the term of a representative from P.E.I. and the public sector is over, that arrangement will shift to Nova Scotia. Thus, the Nova Scotia representative will be public and the P.E.I. representative will be private. At some point in the cycle of reappointments, there will be someone from either the Yukon or Nunavut. I cannot tell you when that will happen, because the current appointees will be reappointed on an one-year basis to get us through the Crown Corporation status. The board's nominating committee will then bring forward recommendations on the composition of the board, so that some members will be appointed for three years and others for one year. Thus, we will have a rotation system and new people on the board.

That does not answer your question. Perhaps our legal counsel might be able to indicate whether the minister has the authority to expand the composition of the board, or whether there is a legislative requirement.

Senator Fairbairn: That is fine. The point is to determine how the committees operate. There are numerous different things happening in the north -- especially within the past year with the development of the diamond mines -- a very beautiful area that has so many more opportunities. I understand the constraints under which you are working, but there should be a pitch for people to keep an eye on the territories.

Mr. Watson: I received an e-mail today from our staff that a Martha Stewart program which was filmed entirely in the Yukon will air on October 6, 2000, and will focus on cuisine in the Yukon.

Senator Fairbairn: Every little bit counts.

Mr. Watson: The show is well watched, and they do some creative and imaginative work in the northern territories. For instance, this summer, Whitehorse is receiving three plane loads of tourists each week from Germany. They want to experience the openness and wildlife. A number of Japanese tourists also travel to our north.

Mr. Wheelock: The Japanese have discovered that it is a popular aurora viewing experience and have created tours called "Aurora Viewing." The territories also serve our committees and promote these issues as well. We had an extraordinary meeting of the incentive travel program put together by the Yukon. They took people on an incentive tour in February and did all the winter experience events -- camping out on the ice, travel on the rivers, and so on. Wherever there is a market opportunity, we hear about it. If the market is developing one, we will try to work with the product cluster to ensure that it is market ready. We then use various programs to market that in areas where it holds appeal.

Senator Fairbairn: Germany in particular has tremendous interest in aboriginal cultures -- north and south.

Mr. Watson: Clause 11 of the bill describes the composition and appointment of board members. It states, in part, that up to seven shall be tourism operators based on geographic considerations, and up to nine shall be private-sector representatives, with no limitations on where those can come from. Those are all under the bill and will be appointees of the Minister of Industry. We can pass the issue that you raised along to the minister or you may wish to pursue that with him.

Senator Callbeck: Apparently Senator Christensen will be featured on the Martha Stewart show.

Senator Kennedy: Mr. Watson, you have a wonderful, challenging job ahead of you.

The commission may enter into an agreement with the government of any province or territory to carry out its objectives. What has your experience been in the past? Has the commission done this before and to what extent has that become a part of your work?

Mr. Watson: We have a very good working relationship with all of the provinces, without exception. The farther away from Canada you go, the more difficult it is to sell a province or a city, so you sell the country instead. We have very positive relationships with all the provinces in joint marketing activities. Granted, I have only been here about four weeks and have attended one executive committee board meeting, where we met with the deputy ministers from different provinces. It is a very cordial and positive relationship because we are working toward the same goal -- we want to see more tourists come to Canada and more Canadians spend their money in this country. Subsequently, our board must decide whether to enter into multi-year agreements or continue on a bilateral basis, as we have been doing to date.

That is a somewhat divisive issue, because the strength of the organization to date has been that all of the marketing plans have been driven by the private sector committee, which brings forward recommendations on how to spend the money to the board, and the board makes the final decision. I think Mr. Wheelock has a comment with respect to some statistics vis-à-vis the issue you raised.

Mr. Wheelock: It is an important issue, but in fact we are making great strides even without the formal memorandum of understanding. In 1997-98, the provinces contributed about $7 million to joint marketing programs with the CTC. In 1998, that had nearly doubled to $13 million. In 1999 and the current year, we are up to about $27 million. Part of that is driven by the fact that the provinces have significantly increased their own marketing budgets, so they are able to do more. However, they realize that the tripartite arrangement between the CTC, their own provincial marketing organizations -- whether line departments of the government or special operating agencies -- and the industry, can create a needed critical mass to market the country effectively. The Australian government alone, for example, has committed about the equivalent of our total marketing dollars. The competition is huge, as is the need to amass those resources. However, with or without the memorandum of understanding, we are getting significant contributions from the provinces in all our marketing programs.

Senator Kennedy: Mr. Watson, you talked about the new structure that allows you to open bank accounts in other countries where you will be functioning. Do you know, at this stage, what kind of budget you will have for that? It only makes sense to go where the people are to invite them. How will you balance that kind of offshore investment in time and energy in getting our message out?

Mr. Watson: That is determined by our research on what our priority markets are. We can provide members of the committee with a breakdown of how much we spent on various different areas. For example, in Asia Pacific this year, our core budget is $9 million, and $9 million partnered with the private sector, for a total of $18 million. In Europe, the core budget is $10 million, and $19.7 million in partnered. In U.S. leisure, the core budget is $18 million, and $31 million in partnered, and so on.

Therefore, we believe that we have a formula that works. It certainly has been a positive experience, given the number of tourists who have visited the country -- individuals who have come to experience Canada as a tourism destination. We are in constant contact with the provinces to look at their priorities. For instance, the priority for the Atlantic provinces is the New England states because of the proximity to their border.

Senator Kennedy: The bill states that the board will meet twice each year. Do you feel that that is adequate?

Mr. Watson: I am not in a position to answer that because I have yet to go to my first board meeting. The executive committee has the power and authority of the board, and it meets more frequently. Ultimately, the board will decide whether we should meet more often. The target that the chairman of the board has set out is to try to meet four times each year.

Senator Kennedy: That sounds more reasonable.

Mr. Watson: Ms Péan has provided me with a draft of the agenda, and it is a long, substantive meeting. That is because our last meeting was several months ago in Calgary. Greater frequency, obviously, would allow the board to make decisions more frequently. In the interim, the executive committee of the board, under our rules and regulations, has the authority of the board.

Senator Kennedy: I wish you well.

The Chairman: Mr. Watson, may I say, in wrapping up, that your grasp of the business is awesome. This bodes well for the department and for the future of the Crown corporation.

We will proceed with clause by clause. Can I have a motion?

Senator Banks: I so move.

The Chairman: Can I have a motion to dispense with clause by clause?

Senator Carstairs: I so move.

The Chairman: Can I have a motion to report the bill back to the Senate without amendment?

Senator LeBreton: I so move.

The committee adjourned.