ENCOURAGING INDUSTRY INVESTMENT
With the current economic downturn in both the US and Canadian economies, there has been a lot of discussion on both sides of the border of the need for some sort of “economic stimulus package”. Much of the discussion has centered on what sorts of things governments can do to encourage economic growth. Tourism has needed some sort of stimulus for a while, and this finally led to Ontario undertaking a Tourism Competitiveness Study.
Business investment is one important factor in economic growth, and governments are looking at what they can do to stimulate investment. A very basic item that has been brought to light by the collapse of much of the banking and mortgage industry in the US is the simple ability to borrow money. The sub-prime crisis has made lenders wary of loaning money to anybody, even those who formerly looked like a good risk.
This is certainly nothing new to the tourism industry. Our industry has traditionally had trouble borrowing money, either because we were not well understood by lending institutions, or because other factors genuinely led to us being seen as a poor risk. Now that almost everybody has trouble borrowing money, governments are looking at ways to make money available to businesses. With access to capital as a problem for many businesses, governments should strongly consider re-introducing loan guarantee programs and other tools to make money available to the tourism industry to modernize and upgrade facilities.
Another item under widespread discussion is government spending on public infrastructure. This is an area that could have a huge positive impact on our industry if we see some significant spending in the right places. NOTO has long advocated for improvements to our transportation and telecommunications infrastructure in northern Ontario as absolutely essential to not only our tourism industry, but to overall economic development in our communities. Investment in our roads, community airports, rail infrastructure and internet connectivity are absolutely essential if we are to see real tourism growth in the north.
We were making the case for the need for both public investment in infrastructure and incentives for business investment long before the current economic crisis hit. NOTO’s presentation to the Ontario Tourism Competitiveness Study, and our direct discussions with Mr. Sorbara and his senior staff have emphasized these points. NOTO has long advocated for a return of loan guarantee programs, like the old NODC as one method of encouraging investment.
A more fundamental factor we need to address, however, is how to make investment in our industry more attractive. Unlike other forms of tourism, we depend on sound management of public lands and waters, and our industry continues to operate in a planning and regulatory environment that often does not encourage investment.
The use of Land Use Permits as the main form of tenure for many facilities has discouraged investment and made borrowing money for facilities virtually impossible. That is why we have worked with MNR to move from LUPs to long term leases. In the view of most in the industry, even this step does not go nearly far enough. The real key to encouraging investment and improving access to capital is to allow outright ownership of the land. Other jurisdictions, like Minnesota took this step some years ago and have seen the resulting increase in investment.
We also need to address some of the other factors that make tourism facilities an unattractive investment. Our businesses depend on sound natural resource planning, whether for fish and wildlife or to maintain the remote character of the natural environment. Without effective management tools that provide assurance of the long-term sustainability of the natural features our industry depends upon, few will invest.
Governments are under intense pressure during these tough economic times to invest heavily in infrastructure and to deliver subsidies to struggling industries. Although these steps are necessary, there are other things that can be done by government that not only do not cost money, but may actually generate revenue. Creating a comprehensive resource-based tourism licensing framework and consolidating and streamlining regulation should save money in the long run.
Effective land use planning would reduce the cost of forest management planning and potentially open up new harvesting opportunities for the forest industry. Sale of land to the tourism industry by government would generate significant immediate revenue.
The current world economic crisis and the Ontario Tourism Competitiveness Study both provide opportunities to look at our industry and find ways to become more competitive and bring more prosperity to our communities. Some of the solutions will require money from government, but others will be achieved by working smarter. It is time for our industry and government to work together to seize the opportunity.
This article was taken from pages 5 & 6 of NOTO's "The Outfitter" publication, Winter 2008 Issue