MATTHEW LAU: Tourists — not taxpayers — should pay for tourism

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As the weather warms, you may be surprised to learn the federal government has already planned your summer vacation for you. To be fair, if you don’t like what the government has planned, you don’t have to go. But you still must pay some of the expenses for those who do. In fact, you must pay whether anyone goes or not, because Ottawa spends taxpayer money on subsidies for tourism and vacation sites.

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For example, the federal government recently announced $1.6 million for tourism initiatives in northeastern Ontario, including money for a ski club to buy a large trail groomer, a canoe and kayak rental service to upgrade facilities and buy equipment, a municipality to build a new wharf to dock cruise vessels, a First Nation to construct a boardwalk to improve access to 32 boat slips, and so on. Of course, federal subsidies spread far beyond Ontario. For example, there’s the recent $353,000 in federal funding for the Atlantic Canada Cruise Association “to implement a three-year strategic plan to enhance cruise tourism in the region.” All Canadian taxpayers must chip in whether they go on an Atlantic Canadian cruise or not. And don’t confuse this $353,000 handout with a separate $350,000 for the Charlottetown Harbour Authority to support cruise tourism in Prince Edward Island.

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Little justification

Aside from the issue of fairness, these subsidies make no sense. From an economic perspective, there are two standard justifications for government subsidies. One is to fight poverty by subsidizing necessities for the poor. Six-figure handouts for cruise tourism clearly do not fall into this category.

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The second possible justification is what economists call a “positive externality,” which means the economic transaction generates benefits for third parties uninvolved in that transaction. An activity that cleans the environment can be said to have positive externalities; people going on cruises cannot.

More examples. The federal government recently announced nearly $2 million for eight projects across Alberta: $249,999 for a secluded mountain lodge, $349,629 for Indigenous art galleries, $250,000 for a ranch retreat, $250,000 for a cultural heritage village, $341,184 for outdoor spa amenities and outer facilities at a lodge, $200,000 for Indigenous tourism experiences on a reserve, $184,469 for another Indigenous tourism facility, and $115,000 for a canoe and kayak rental company.

The $2 million for eight projects was part of the federal government’s much larger Tourism Growth Program launched in 2023, which earmarked $108 million over three years to support tourism. This $108 million was in turn part of a larger Federal Tourism Growth Strategy and on top of various other federal, provincial and territorial programs, which hand out taxpayer cash to various corporations and non-profits.

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A final example. The federal government’s “Indigenous Tourism Fund’s Signature Indigenous Tourism Experiences Stream” recently gave a total of $6 million to: an Indigenous cultural centre in Nova Scotia, an Indigenous restaurant in the Quebec City airport, an Indigenous tourism centre in Ontario, an Indigenous thermal spa in Alberta, an Indigenous cultural centre’s café and expanded gift shop in British Columbia, and an Indigenous resort in B.C.

These federal government subsidies are a waste of money. Tourists, not taxpayers, should pay for tourism. Canadians who are uninterested in visiting these tourist locations — and Canadians who cannot afford to go on trips at all — should not be made to pay for them.

Matthew Lau is an adjunct scholar at the Fraser Institute.

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