Thank you, Mr. Chair and members of the committee. It's great to be here in person. We've been doing these virtually over the last few years, so this is my first time in person.
Thank you very much for the invitation to be here today to discuss AIAC's key recommendations for the upcoming budget. As you may know, our members represent over 90% of aerospace activity in Canada, covering the civil, defence and space sectors.
At the outset, I would like to state our appreciation for the committee's inclusion of most of our recommendations in your report last year.
I'll begin by speaking about our first recommendation, the development of a national aerospace strategy, which is critical for the prosperity and development of the aerospace industry in Canada. Just last spring, the Standing Committee on Industry and Technology also recommended the development of such a strategy. It's encouraging to see the agreement that aerospace is an industry that is a priority for Canada.
Today we need to position aerospace as a priority because it is a key economic driver and it requires full support from all parties. If we are to keep what we have and grow this industry with its high-skill and good-paying jobs, we need to ensure that the global aerospace supply chain recognizes that Canada has identified aerospace as a national priority.
The global challenges and technological opportunities of the coming decades demand the very best of Canadian aerospace innovation, and a corresponding strategy with government is absolutely critical. Meeting net-zero goals, reimagining air and space mobility, and safeguarding Canada's national interests are serious issues that require focused planning. That is why Canada needs such a comprehensive, forward-looking aerospace plan for civil aviation, defence and space—a plan that re-establishes a collaborative partnership between industry and government, a plan that leverages our country's competitive advantages over other nations.
We are also recommending the injection of resources to enhance Transport Canada's aeronautical certification capacity. The emergence of new technologies and the demands associated with Canada's commitment to net-zero greenhouse gas emissions by 2050 mean that it is essential that certification capacity be able to support the new innovations that industry is pursuing. Transport Canada needs to grow the expertise and resources to sustain its international reputation for excellence and to safeguard Canada's global competitiveness.
On the defence side, we're recommending that the government consult with industry on NORAD modernization, as well as the defence policy review. Let's ensure that companies based in Canada are benefiting and are contributing their unique capabilities within the North American supply chains as we take significant steps to modernize and protect our sovereignty.
We are also recommending that the government modify certain aspects of the aerospace regional recovery initiative and the strategic innovation fund to enable more companies to access these innovation programs. We have also made representations on the challenges we see with the export control permit process and the challenges we see across the country on the labour market side.
Again, the priorities would be the need for an aerospace strategy, the innovation ecosystem, Transport Canada resources, SIF and ARRI changes, export permits and labour market challenges.
I would like to close by speaking about the select luxury items tax that came into effect on September 1 of last year. Despite some changes made by the government, which we thank them for, our members have seen orders cancelled in the last months, affecting sales and workers in the sector. We're talking about not only those who build the aircraft, but also the supply chain and the post-production operations of maintenance and repair.
It's concerning that the government decided to implement this tax without any analysis of the impact on the industry or the workers. Because of the lack of financial analysis, the industry commissioned an independent study through Professor Roy of HEC Montréal. It shows that more than 2,000 jobs in the aerospace sector will be negatively affected—even more than industry had previously recognized.
According to the research, the government will lose $29.9 million in tax revenues and collect only $9 million per year with this tax. The math here just does not make sense. The impact of this tax on Canada's international reputation should not be overlooked, and also the resulting losses in foreign investment in Canada.
Aircraft should be excluded from this tax. We ask you, the committee, for your support with this request.
This position is also shared by the unions representing these workers. It is clear that in its current form, this tax is hurting aerospace workers and hurting our economy, and the government needs to exclude aircraft from this tax.
Thank you for your time and support. I welcome your questions.