Finance Committee on Oct. 10th, 2023

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Duncan.

Our last questioner for this panel of witnesses is MP Morrissey, please.

[Bobby Morrissey, Liberal, Egmont, PE]

Thank you, Mr. Chair. I'm sure you'll tell me when my time is up.

I have a couple of points. One is a point of record because we keep getting misinformation.

The fishery, as well as agriculture, is exempt from carbon pricing on any inputs related to the industry. We should be clear on that because there's a lot of misinformation, unfortunately, that goes around as it relates to carbon pricing. The one thing that we know for sure is the high cost that is being hit.

I want to go to Ms. Griffin.

Ms. Griffin, could you elaborate a bit more? I'm aware of a number of small businesses, especially in the tourism industry, that have received funding from the Fiona relief fund. To leave the impression that, a year later, no funding has been rolled out is inaccurate. Am I correct?

[Kim Griffin]

First and foremost, I would like the opportunity to ask our members specifically about that, as I alluded to earlier, to get that specific information because, based on the timing of this meeting, we weren't able to go to our meeting. What our staff are telling us is that, of the meetings that they've had with ministers, trying to prescribe if there's a specific post-Fiona relief program.... I think you're correct in saying that there have been businesses.... We would never try to present that businesses have not received any Fiona funding. It was the specifics of the announcements and the related requests with our staff in terms of the ministers as part of what the funding is going towards in our businesses and how that has been broken down specifically.

[Bobby Morrissey, Liberal, Egmont, PE]

Just to clarify.... Are we differentiating between the impact of Fiona and the cost that businesses may have to incur to mitigate against further hurricane-termed storms? We know we are going to get them, especially in the tourism sector, which was hit hard on the north shore.

I have a small campground that is still not in business, and it will probably be wiped out forever. With the insurance and the amount of money that Fiona relief funds can give them, they will probably not be able to rebuild.

Am I correct on that?

[Kim Griffin]

I think there are two separate issues in terms of the billion dollars that was sent for the requests related to hurricane Fiona. The additional for system hardening or in terms of potential other hurricanes is a separate item altogether.

[Bobby Morrissey, Liberal, Egmont, PE]

Thank you. I just wanted clarification.

I do agree. A lot of the targeted Fiona money has been slow to roll out. In fact, there are a number of factors. It's documenting clearly where the insurance companies are. I find that frustrating as well, because there is the difference between what the insurance companies pay and what their real loss was, and that has to be dealt with.

I want to go to Mr. Sanderson.

Am I correct on this? You said the industry is tapped out. I enjoy beating up on CMHC too as a large bureaucracy that seems slow to adapt to the uniqueness of this country in which every place is not a downtown major urban centre, but if the industry is tapped out, am I correct to assume that it's not how much money government pushes at it...? The needle is not going to move right away.

[Sam Sanderson]

There's only so much capacity. It can only do so much. Going back to my statement, industry has been working at 120% and 130%, so just—

[Bobby Morrissey, Liberal, Egmont, PE]

Could I just stop you? If industry is working is 130% and we're facing significant housing shortcomings, do you have something to offer this committee so that we could take a different path in dealing with it? If we're just going to continue pushing on the same levers that we have, then obviously we're not going to deal with the issues.

[Sam Sanderson]

From my perspective and an industry perspective, we need skilled people.

[Bobby Morrissey, Liberal, Egmont, PE]

That becomes immigration, again, and training.

[Sam Sanderson]

That becomes immigration and training.

[Bobby Morrissey, Liberal, Egmont, PE]

Can we get smarter on building? You've talked about different building techniques. I've seen a few in my riding. One was imported housing that was prefabricated and the labour time was cut in half. Is that realistic?

[Sam Sanderson]

In my opinion, there's way more to that. The construction time on site was a little faster, but if you look at it from start to finish, it was no faster. It may have been a little longer. The cost of production was more—

[Bobby Morrissey, Liberal, Egmont, PE]

That's often thrown up as a solution.

[Sam Sanderson]

For sure.... Why couldn't we build it here? Why are we importing? Why couldn't we be building that modular here with something similar to what we're doing? We have to train people. We have to get people to create employability skills.

Last year in my own programs that have been graciously funded through the federal government and a couple of programs with the provincial government, we put 92 brand-new people into the industry who had never touched a hammer before, so projects—

[Bobby Morrissey, Liberal, Egmont, PE]

Some of them were female. Is that right? A lot were female.

[Sam Sanderson]

There were quite a number of females. There were a number of newcomers and a lot of youth at risk, youth with barriers to employment, so thinking outside that box and giving anybody and everybody an opportunity....

If you don't mind, Mr. Chair, just for a second, I don't mind using myself as an example. I have a grade 9 education. I didn't finish grade 10. If it weren't for people putting a hammer in my hand and for building lobster traps as a young boy, I would have never had any experience. It was people giving me the opportunity. I have my training centre there now because I need to give back. I need to create that opportunity.

Not everybody is meant to go to post-secondary. Not everybody is meant to go into IT or whatever. Let's put real tools in real people's hands and give them the experience. At the same time, we are creating employability skills and we're creating jobs. We're battling climate change at the same time as building affordable housing.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, Mr. Sanderson, for sharing your personal story. I think it resonates with this committee and with everybody who will be able to read in our Hansard and our report what you've had to say.

Thank you, MP Morrissey.

Just before we transition to our next panel of witnesses, I will say that these witnesses have been terrific in being able to share their stories and all the information that will help to inform our report for our pre-budget consultations and the future budget 2024.

We thank you on behalf of the members, the clerk, the analysts, the interpreters and everybody who is here and makes this happen. We thank you very much for your testimony, for your time and for your hospitality.

We are suspended at this time, members, for the transition to the next panel. Thanks.

[The Chair, Liberal, Peter Fonseca]

I call the meeting back to order.

We're back, members and witnesses, in beautiful Charlottetown, P.E.I.

We just had an excellent first panel of witnesses. I'm sure this one is going to be the same.

For the witnesses and the members, I know we told you about your interpretation devices. We would ask that you don't put them too close to the microphones. Just keep them away from the microphones and use them as needed.

On that, I get to introduce another, like I said, excellent panel of witnesses.

From the Aerospace Industries Association of Canada, we have with us the president and chief executive officer, Mike Mueller. From the Canadian Mental Health Association, Prince Edward Island division, we have the executive director, Shelley Muzika. From the Prince Edward Island Federation of Agriculture—we thank the farmers for the food that we eat—we have Donald Killorn, who is the executive director. His Worship, the mayor of the town of Stratford, Steve Ogden, is joining us today.

Thank you very much.

As you know, we are all here for our pre-budget consultation. This is an opportunity for us to go across the country. Today, we are in Charlottetown, P.E.I., to hear from stakeholders and witnesses to then be able to inform budget 2024.

On that, I will ask Mr. Mueller to start off with five minutes of opening statements or testimony.

Thank you.

[Mike Mueller, President and Chief Executive Officer, Aerospace Industries Association of Canada]

Thank you, Mr. Chair and members of the committee, for the opportunity to address you today on behalf of the Aerospace Industries Association of Canada.

Allow me to once again thank you, members of the committee, for your commitment and support for our industry. Atlantic Canada continues to contribute significantly to Canada’s aerospace supply chain. In terms of value, I can say that Atlantic Canada punches way above its weight. I am honoured to represent many of those companies who call Atlantic Canada home.

Your willingness to work with and understand the contribution aerospace makes to the overall Canadian and regional economies is very much appreciated. I want to also thank this committee for including the majority of our previous recommendations in last year’s report. It seems that together the committee and industry are aligned in many of the recommendations that we've brought forward. It is my hope that we can join forces once again this year to request the establishment of an aerospace strategy.

By way of quick background, AIAC represents 90% of the aerospace industry in Canada, including companies here in Atlantic Canada. Our sector contributes to over 200,000 jobs in Canada, accounting for $27 billion in Canada’s GDP. While the industry has shown resilience bouncing back from the impacts of COVID, it has not kept pace with international competitors, and we aren’t yet where we were before COVID.

To address these challenges and seize the future opportunities while contributing to Canada’s economic recovery, there needs to be a long-term aerospace industrial strategy. This strategy should address such key challenges as small business scale-up, procurement efficiency, skilled labour shortages, innovation, sustainability and certification. The call for a national strategy has garnered widespread support from parliamentary committees, industry stakeholders, unions and the public.

I want to also turn to government policy, such as the so-called luxury tax, which is not helpful for protecting jobs and securing future work. Since the last time I appeared before this committee, the tax has come into effect. You’ll recall the study by Professor Roy. We are now told that companies in Canada have seen the loss of 19 aircraft, with sales worth over one billion dollars, causing significant revenue loss, jobs that will be lost, and lost income tax and sales tax revenues.

Exempting aircraft from this tax is a necessary step to protecting an industrial sector that is an economic engine for the country and throughout Atlantic Canada. Additionally, to ensure the industry's growth, we call for increased resources to enhance Transport Canada's aeronautical certification capacity. Transport Canada’s work in this area is world-renowned and the envy of many. With emerging technologies, the certification environment must be supported.

If we are to succeed as an industry, we must have a thoughtful and critical look at aerospace workforce development. We need a comprehensive plan that includes skilled labour programs, streamlined immigration processes and youth engagement initiatives. Projections suggest a looming skills gap. We must collaborate with various government agencies and institutions to address it effectively.

The events over the past few days and in Europe prove that Canada's defence budget must increase to meet our NATO commitments. We are concerned with the recent discussion around possible cuts to the defence department’s budget. We are concerned that there could be the potential for further delayed procurement and effects to capability. We are glad to see NORAD’s DIANA program being established in Atlantic Canada. We will be actively working to ensure that Canadian companies have access to this program in addition to the NORAD modernization efforts.

If we are to attract foreign investment and to meet the needs of and support our Canadian-based industry, we strongly recommend changes to the strategic innovation fund to improve access for aerospace companies. This includes creating an aerospace-specific funding stream, enhancing evaluator knowledge, adjusting repayment rules and streamlining the application process to align with industry needs.

Everyone appreciates the need for a robust application process when accessing taxpayers' funds. However, SIF is complicated. I would encourage the committee to add a review of SIF to your future committee agenda. We are also recommending that the government simplify export permits and controls. Aligning them with allies and providing prompt service to Canadian companies are essential for maintaining competitiveness.

Lastly, we urge the government to develop an actionable plan for the sustainable aviation fuel industry to meet ambitious climate change targets.

In conclusion, thank you for your continued support. I'd be happy to take any questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Mueller.

Now we'll hear from the Canadian Mental Health Association with Ms. Muzika, please.

[Shelley Muzika, Executive Director, Canadian Mental Health Association - Prince Edward Island Division]

Thank you very much for inviting me here today.

I'd like to start off by saying that governments increasingly understand that there is no health without mental health. One-third of people in Canada will experience a mental illness or substance use disorder during their lifetime, yet millions of Canadians cannot get the mental health care they need to be well. The 2023 federal budget included new health accords and a top-up to the Canada health transfer to help improve mental health care for Canadians. These investments provide new and expanded resources for hospitals and physicians and will integrate mental health and substance use specialists into health service teams.

However, hospitals and doctors alone were not set up to carry the full weight of mental health care. Hospitals are meant to respond to emergencies and serious illnesses, and general practitioners are ordinarily the front door to mental health care in Canada. Many physicians lack training to assess and treat mental health and substance use health concerns, and they have limited pathways for referring their patients to other services.

Canadians need greater access to community-based mental health care. They require community mental health care before, during and after the care they receive from physicians and at hospitals. This care includes programs that help prevent crises in the first place, as well as services that make recovery possible, like peer support, counselling and social work case management, alongside social supports for housing and employment.

These services, though, are excluded from our free public health care system. The services that are provided by community mental health organizations are significantly underfunded, and when they are available, there are or can be long wait times. At the same time, Canadians, many struggling to make ends meet as costs rise, as we know, must pay out of pocket for private counselling and psychotherapy. This means only some will get care.

Under the Canada Health Act, most mental health services are publicly covered only if they are deemed “medically necessary” and provided by hospitals or by doctors. However, millions of Canadians do not have a family doctor, and when a person in crisis is treated in a hospital setting, they are often discharged without follow-up care to help them recover.

The federal government has the legislative power and a shared responsibility to ensure that all people in Canada receive the mental health care they need when they need it. Looking toward the launch of the 988 suicide and mental health crisis helplines in November of 2023, it is more important than ever to adequately fund community mental health, substance use health and addiction services. If community-based care is not properly funded, callers to 988 who need additional care may have nowhere to go but to emergency departments, placing a greater strain on hospital capacity and resources. We, as a collective, should be preventing hospital visits whenever possible and providing community care to help people recover. This will require federal investment for community-based services.

The Canadian Mental Health Association nationally has three recommendations. I will speak to one, though, specifically. Recommendation one is that the government provide $950 million over five years to create a “care after the call” fund for crisis prevention and response services in communities. Starting on November 30, 2023, people in acute suicidal or mental health distress will have access to 988. The 988 helpline is intended to de-escalate a crisis without calling on law enforcement and to provide immediate counselling. Given the very nature of the helpline, 988 responders can offer only short-term support and suggest additional community mental health resources.

Within their capacity, community organizations—typically charities and non-profits—offer many mental health services at no cost or help people to navigate to them. However, the demand for mental health services is already high, and existing community-based services are overstretched. These include mobile crisis service responses, safe beds, peer support and social supports like emergency housing and food.

The demand for community-based care will significantly increase in the lead-up to and after the launch of 988. However, community mental health providers, already constrained by long wait times and limited capacity, will not have adequate resources to respond to the increased need for supports after a person calls 988. As they wait for extended periods, people’s symptoms will worsen and possibly become increasingly urgent. Thus, care after the call is needed.

The federal government has a responsibility to ensure that callers to the federally funded 988 helpline can access services in their own community. The 988 initiative provides the federal government with the opportunity to examine its role in resolving the pressures and challenges in the mental health care system that are within its jurisdiction.

The “care after the call” fund will help fill the gaps in the system and allow the federal government to target interventions that meet the unique needs of communities across the country. For instance, it could establish mobile crisis response teams. Further, the federal government is developing a national suicide prevention action plan for release this fall, alongside the launch of 988. The action plan will fall short if it does not envision how struggling Canadians access community-based services to address the issues underlying their crisis.

The CMHA recommends that the federal government establish the “care after the call” fund in 2024 through the Public Health Agency of Canada and work with community stakeholders to design the fund and develop the appropriate mechanism to distribute the funding.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Muzika.

Now we'll hear from the P.E.I. Federation of Agriculture.

Go ahead, Mr. Killorn, please.

[Donald Killorn, Executive Director, Prince Edward Island Federation of Agriculture]

Thank you, Chairperson Fonseca.

My name is Donald Killorn and I'm the executive director of the P.E.I. Federation of Agriculture.

On behalf of our members, I want to thank you for the invitation to present here today. We represent over 500 Island farm families and 17 commodity groups. Our mission is to improve the sustainability of Island farms and to promote the sustainable production of food on Prince Edward Island.

I understand that the committee is conducting consultations in advance of the 2024 budget. In 2022, crop and livestock production contributed $283 million to our provincial GDP. As well, food manufacturing contributed an additional $265 million. Taken together, agri-food contributes about one-third of all goods produced on Prince Edward Island, so it's a major part of our economy.

However, we saw very little year-over-year growth from 2021 to 2022, and our industry faces significants risks that this committee and the upcoming federal budget can assist with. Strategic federal investment is required to ensure that we grow our economic impact in a sustainable way.

As I'm sure you've heard across the country from many different industries, our farmers face growing risk from climate change. Since 2019, we have experienced two devastating hurricanes—the worst in any farmer's memory—as well as a significant drought. These natural disasters are destroying our industry's capital, and projections show that their impact is likely to increase. We need the government to respond to these disasters with aid systems that can help businesses and communities rebuild more quickly, rather than the current strategy, which depends on financial assistance from ill-equipped agricultural business risk management programs.

I'll give you an example from Fiona.

Post-Fiona, the provincial government contributed $17 million to the recovery effort. The federal government visited us almost immediately, promising support, and $300 million was allocated to ACOA for distribution throughout Atlantic Canada for multiple different industries. We still have not seen any of those funds allocated for agriculture.

We recently received $1.7 million from provincial and federal governments committed to recovery in the fruit tree industry through AgriRecovery, which is an AAFC program. Against the $17 million that was provided by the provincial government, this pales in comparison, and there's been a significant lack of support because of the strategy taken to respond to climate disasters.

Beyond trying to fix what has been destroyed, we need strategic investment in climate-resilient agriculture so that we can implement the adaptations that our stakeholders have identified. This is popularly referred to as “building back better”.

Making investments in our adaptive capacity will allow us to build the resilient barns, hedgerows and orchards that will stand up to the increasing severity and frequency of storms. By making those investments today, we are preserving our industry's capital and ensuring that it can grow instead of being lost in the next storm, fire or drought. These proactive investments are good business for Canadian taxpayers and include here, on Prince Edward Island, access to irrigation infrastructure, support to install electrical service underground, and storage and animal housing retrofits.

Each province in Canada will tell you the same story. They have needs under a program like this.

While working to adapt to climate change, our farmers are ready to be active leaders in reducing and sequestering greenhouse gases, but we need the support and resources do so. According to a very recent report from RBC and the Arrell Food Institute, Canada invests less than one-third of what the U.S., Australia and the European Union each invest in climate-smart agriculture. All four of us pale in comparison to what China devotes to the same topic.

Here on Prince Edward Island, we have the country's first provincial net-zero target as a province. It's not just in agriculture. To reach that, agriculture has been asked to reduce its emissions by 40% by 2040. Currently, the PEIFA implements the on-farm climate action fund. This $670-million federal investment in de-risking best management practices in agriculture has been very popular on Prince Edward Island.

Our portion of the program was fully allocated this year before the first month of the program was even completed. Continued investment in that program should be matched with additional resources for the establishment of soil carbon as part of Canada's greenhouse gas offset credit system. Completing the enhanced soil organic carbon protocol and opening our national greenhouse gas market for soil carbon projects will allow our farmers to continue implementing the practices we need to meet our provincial and national climate targets.

For P.E.I. agriculture, we stand poised to reduce our emissions by 140,000 tonnes per year by 2040. Budget 2024 should ensure that everything is done to make those reductions measured, verified and reported to the Canadian credit system—the Canadian regulated credit system—rather than a voluntary market that we can't fully.... I don't want to say “trust”, but one that we can't fully rely upon.

Along with the on-farm climate action fund, the PEIFA also implements the advance payments program. The APP is a federal loan guarantee program that provides agricultural producers access to low-interest cash advances against their crops and livestock. I'm sure you've heard about it already in your consultations. Budget 2023 increased the interest-free portion of the loans from $100,000 to $350,000. If it's not addressed, that number will return back to $100,000.

Here on Prince Edward Island, we are dealing with a significant increase to our cost of production as well as an increase in the prime lending rate. We have to continue to make this available to farmers at the current level to ensure their cash flow and insulate them against unfavourable market conditions. Now is not the time to diminish the impact of the advance payments program.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Killorn.