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.