Finance Committee on June 2nd, 2026

[Emily Holtby, Vice President, Government Relations, AIA Canada]

Madam Chair and members of the committee, thank you for the opportunity to appear before you today.

My name is Emily Holtby. I am the vice-president of government relations for the Automotive Industries Association of Canada, otherwise known as AIA Canada. We represent the $44-billion auto care sector, which employs more than 500,000 Canadians from coast to coast to coast, including aftermarket manufacturers, distributors, parts stores, and service and repair shops. Our industry plays an essential role in Canadians' daily lives. We keep almost 27 million vehicles on the road safely, reliably and affordably.

Today I would like to focus my remarks on two interconnected issues that are directly impacting affordability for Canadians. These are the right to repair and the shortage of skilled labour in the automotive service sector.

First, on the right to repair, keeping a car on the road is becoming unnecessarily expensive for Canadians. Modern vehicles are no longer purely mechanical machines; they are computers on wheels. Increasingly, automakers control access to the diagnostic and repair data required to service those vehicles. When independent repair shops cannot access that information, Canadians are effectively forced back to the dealership for repairs and maintenance. The result is reduced competition, fewer consumer choices and higher repair costs.

According to a recent MNP study, Canadians can save up to 30%, or roughly $500, on common repairs when they have the option to use an independent repair facility. For more labour-intensive or complex repairs, those savings can reach as high as 80%. These restrictions disproportionately affect rural and remote Canadians. In many communities, there may not be a dealership nearby, meaning that families are forced to drive hours for repairs, lose work wages, take time off, and absorb additional fuel and service costs simply because local repair shops can't always access the tools and data they need.

This is fundamentally a competition and affordability issue. The federal government has spoken for years about lowering repair costs for Canadians, particularly in such sectors as electronics and home appliances, but Canada remains without a clear national automotive right to repair framework. Our allies around the world are moving ahead. Provinces are beginning to act. Consumers are increasingly demanding greater choice when it comes to repair and, of course, affordability. AIA Canada believes the federal government has the opportunity to establish right to repair legislation that mandates timely, secure and standardized access to vehicle repair and maintenance data for independent service providers. Doing so would protect consumer choice, support small businesses, strengthen competition and help lower the cost for millions of Canadians.

Second, we need to address the skilled labour shortage facing our sector. Even if Canadians have the right to repair their vehicles, we still need skilled technicians available to do the work. Today there are approximately 6,800 automotive technician vacancies across Canada. At the same time, vehicles are becoming significantly more advanced, particularly with the transition toward electric vehicles, advanced driver assistance systems, connected vehicles and high-voltage battery technologies.

Automotive service techs are now navigating some of the most rapid technological changes of any Red Seal trade in the country. Without significant investment in training and workforce development, Canadians will continue to face longer wait times, higher repair costs and reduced access to vehicle servicing, particularly in smaller communities. We are therefore recommending that the federal government invest in industry-led recruitment, training and upskilling initiatives, including with the creation of a skilled trades promotion and navigation fund, with automotive trades serving as an initial pilot sector. This could be part of the $6-billion team Canada strong initiative announced in the spring economic statement.

In the short term, we are also asking the government to establish a targeted labour mobility pathway for automotive service techs, including accelerated credential recognition and faster LMIA processing to help stabilize the workforce while domestic training capacity grows.

In conclusion, if Parliament is serious about addressing affordability, competition and consumer choice, then vehicle repair must be part of that conversation. Canadians deserve the ability to repair their vehicles safely, locally and affordably.

Thank you for the opportunity to appear today. I look forward to your questions.

[The Chair, Liberal, Karina Gould]

Thank you so much, Ms. Holtby.

We will continue now with Mr. Arcand from Canadian Manufacturers and Exporters, please.

[Alan Arcand, Chief Economist, Canadian Manufacturers and Exporters]

Thank you, Madam Chair and members of the committee.

I'm pleased to appear before you today on behalf of Canadian Manufacturers and Exporters.

CME represents Canada's manufacturing sector, which is critical to Canada's prosperity, security and resilience. It employs more than 1.8 million Canadians across the country, generates over $200 billion in GDP and exports almost $450 billion in goods annually.

These figures understate the sector's broader impact. Manufacturing supports activity across the economy through deep and broad supply chain linkages. It is also a strategic industry that underpins Canada's national security, economic resilience and sovereignty.

Manufacturing's strategic importance is precisely why the unjustified U.S. tariffs are so damaging. Tariffs and trade uncertainty strike at the heart of Canada's industrial base, weakening business confidence, delaying or cancelling investment, and leading to layoffs and production cuts. Even if the CUSMA review produces a positive outcome, recent experience shows that U.S. trade policy can shift quickly. For manufacturers making long-term investment decisions, market access can no longer be taken for granted.

We can already see the impact of these tariffs. Since last January, Canada has lost 57,200 factory jobs. Over the same period, manufacturing construction has fallen for 15 straight months, for a cumulative decline of 27%. Real sales are down 4.7%. As well, the sector's real output has contracted for three straight years, and a fourth straight decline in 2026 appears likely.

To make matters worse, these trade pressures are hitting a sector that's already been weakened by long-term structural challenges, especially weak investment. The investment cap is stark when we compare Canada with the United States. U.S. manufacturers invest roughly three times more per worker than Canadian manufacturers do. This means that the average U.S. worker is being equipped with more than $55,000 in new equipment, technology and structures each year, compared to closer to $20,000 for Canadian factory workers.

In Canada, investment has been so weak that manufacturers are barely replacing existing plants and equipment. The sector's capital stock is now 13.5% lower than it was in 2000, while the U.S.'s manufacturing capital stock has grown by 40% over the same period. This weak investment record is a key reason that Canada's labour productivity has lagged so far behind that of the United States.

Again, the sector is under severe pressure from tariffs and trade uncertainty, which are compounding long-standing challenges that have left Canada's industrial base less competitive and less resilient. The federal government has taken important steps, including tariff relief programs and targeted support measures for manufacturing and other affected sectors. These priorities are the right ones, but Canada must build on them. The focus should now be on timely, predictable and practical implementation.

Today I want to highlight three priorities.

First, the federal government must continue reducing red tape and regulatory burden. This is one of the biggest and lowest-cost opportunities to boost investment productivity and prosperity. This would include legislating growth and competitiveness mandates for all regulators, requiring them to consider the impacts of their decisions on economic growth as a statutory obligation. It would also include expanding the scope of the one-for-one rule. Despite this rule, government-imposed requirements on businesses continue to increase, because the law excludes legislated obligations, ministerial guidance and other non-regulatory requirements. The government should also strengthen the oversight of regulatory cost-benefit analysis. These analyses must be credible, realistic and transparent.

Second, Canada's weak business investment record means that budget 2026 should include further measures to strengthen tax competitiveness. We welcome the government's actions to date, including the productivity superdeduction and enhancements to the SR and ED program. However, as noted in the budget, Canada has the lowest marginal effective tax rate in the G7; it's also below the OECD average. We still do have high average tax rates. Those matter too. Canada's personal income tax rate and corporate tax rate are above the OECD average. They're higher than those of the U.S., and that does restrict our ability to attract capital and talent.

More broadly, Canada's tax system has not undergone a comprehensive review in decades, and the case for action is stronger.

[The Chair, Liberal, Karina Gould]

I apologize, Mr. Arcand. Can you wrap up, please?

[Alan Arcand]

In conclusion, Chair and members, Canada's manufacturing challenges are real and urgent. Tariffs and trade uncertainty have exposed long-standing weaknesses in investment, productivity and competitiveness.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Arcand. We're going to have to end it there.

[Alan Arcand]

Thank you.

[The Chair, Liberal, Karina Gould]

Thank you very much.

We're now going to continue for five minutes with Mr. Gleeson from Canadian Phosphate Limited.

[Daniel Gleeson, Chief Executive Officer, Canadian Phosphate Limited]

Madam Chair and members of the committee, thank you for the opportunity to appear before you today.

My name is Daniel Gleeson, and I'm the CEO of Canadian Phosphate, the company advancing two sedimentary rock phosphate projects in British Columbia, in the Fernie and Wapiti regions. Our objective is straightforward: to build Canada's only domestic phosphate fertilizer production facility. We're advancing the pathway that would allow us to supply Canadian farmers with phosphate fertilizer domestically and reliably from Canadian natural resources.

Sedimentary rock phosphate is the raw material from which 90% of the world's fertilizer is produced, and it has no viable substitute at scale. Canada, one of the most agriculturally productive nations on earth, currently imports virtually all of the phosphate fertilizer it requires to grow its food. Our farmers from the southern prairies all the way to Quebec depend entirely on a supply chain that originates thousands of kilometres from their fields in foreign jurisdictions under policy conditions they cannot influence or control. This is a structural gap in our industrial base, and it's one Canada has the resources and the capacity to close.

Parliament and this very committee have already recognized the strategic importance of phosphate for Canada, but the Income Tax Act does not reflect that reality, creating a gap that makes every domestic sedimentary phosphate project inadmissible for the financing tools the government created to support their growth. That gap must be corrected urgently.

The case for acting now is not abstract. It is in the headlines every day. Geopolitical conflict in the Middle East and export restrictions by China have fractured the global fertilizer supply chains and made prices skyrocket. Canadian farmers are absorbing these costs now and likely will into the long term, with diminishing breathing room. That pressure is transmitted directly to the grocery bills of every single Canadian family, from coast to coast.

Governor Tiff Macklem of the Bank of Canada testified recently before this committee that with higher energy and fertilizer prices now compounding existing food inflation, which has been running near 4% for several months, it is difficult to say that food price inflation is going to come down any time soon. This is a crisis affecting the daily lives of Canadian families already under enormous financial strain, and the factors at fault originate in markets and conflicts Canada does not govern. The only reasonable answer is to build the supply we can control, and that starts with supporting Canadian farmers.

Canadian Phosphate is well positioned to meet the moment. Our Wapiti project in northeastern British Columbia sits at the doorstep of the Peace River agricultural heartland. Our Fernie project connects through existing corridors to southern prairie markets. Together, they would bring lasting economic activity to western Canada while supplying all of Canada with domestically produced phosphate fertilizer, reducing the entire agricultural sector's exposure to the kind of foreign price shock we're all witnessing right now.

That brings us to why we're here before this committee today. As MP Leitão noted a few months back, phosphate is already eligible for flow-through share financing. In principle, that is correct, but the Income Tax Act ties industrial mineral eligibility to non-bedded deposits, namely igneous. Sedimentary phosphate, the source for approximately 90% of global phosphate fertilizer production, is a bedded deposit by definition and therefore does not qualify. That provision makes flow-through share financing and the critical mineral exploration tax credit inaccessible to any project aiming to develop a strong domestic supply chain of phosphate fertilizer from sedimentary deposits.

One amendment—adding sedimentary phosphate explicitly to the definition of “mineral resource”— would correct that.

An independent economic analysis found that our combined mine and fertilizer plant would generate approximately $34 million annually in total GDP, supporting close to 200 high-paying jobs. Once in operation, the project is expected to return approximately $7.4 million annually in federal revenues, while the total cost of the change we are requesting is only $5 million. Sedimentary phosphate is the foundation for nearly all phosphate fertilizer supply, and correcting this oversight is how tens of millions of dollars in private capital can be deployed in Canada and how Canada can become, as Prime Minister Carney has said, its “own best customer”, building the industrial base that feeds our own people from our own land.

Madam Chair and members, thank you for your time.

I look forward to your questions.

[The Chair, Liberal, Karina Gould]

Thank you very much, Mr. Gleeson.

We will now begin with Mr. Kelly for six minutes.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Thank you.

With only six minutes and four witnesses here, I'm going to try to get to each one.

I'm going to start with Professor Pineault.

You stated that you want to see an excess profit tax on the oil and gas industry. Oil and gas exports are overwhelmingly Canada's largest export. The resource is overwhelmingly located in my province. The mineral resource ownership is an area of exclusively provincial jurisdiction.

Do you really think that this is the time, in an extremely volatile commodity...? It's a commodity that was trading below $60 a barrel before the war began, and, in fact, very recently was priced negatively, given the differential on markets that it gets to. Do you really think that it is advisable for the federal government at this time to impose a new tax on Alberta's most important industry?

[Éric Pineault]

Given that the industry itself is saying that it wants to pass on the windfall profits to its shareholders through share buybacks and dividends, that this is a temporary measure and that it is not looking into investing this or passing it on to the workers—most of this is going to go to the U.S., because 60% of the shareholders are American and not in Alberta—I think that there's an opportunity to split this half and half. Half could stay with the shareholders, and the other half....

We're talking about extraordinary windfall profits that are very temporarily hurting Canadians and Americans, and that will just, through the skewed way in which—

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

With limited time, I'm just going to have to move on.

I would suggest that the federal government merely peel back all the regulations that are preventing the reinvestment of these profits in Alberta and straighten that out.

That takes me to Mr. Arcand.

I'd like you to talk about regulation and how regulation in Canada harms its investment attractiveness and productivity.

We're two years into what we were told at this committee is a break-glass emergency on Canadian productivity. Nobody's broken the glass; nobody's addressing it.

Can you give us some suggestions?

[Alan Arcand]

We support what the government's done so far federally in terms of the red tape reduction office and the red tape review.

We think things are moving in the right direction, but we believe that more could be done, as I mentioned in my opening statement.

Even though the government has a one-for-one rule, the number of regulations continues to grow federally. It's also an issue at the provincial level as well, of course; it's not just a federal problem. I think that the federal government could show stronger leadership on that issue too.

All the time that companies spend on regulatory compliance is time not spent on their core business. That's really the crux of it. Over time, regulation tends to layer on and on. I think it's just time for further action on that front.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Do you have some specific information about the cost of compliance?

[Alan Arcand]

I don't have anything specific right now.

We have surveyed our members about certain issues that really affect the manufacturers in Canada, but I don't have a specific figure.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

If you have anything that might help the committee in that regard, you can send it to the committee.

With the time I have left, I'll go to Ms. Holtby about the right to repair.

You spoke about enabling Canadians to repair their own vehicles to lower costs and to ensure that people are able to maintain products.

There have been several bills in the House of Commons that have touched on this, notably one from my colleague Jeremy Patzer, MP for Swift Current—Grasslands—Kindersley.

Could you talk more about the specific recommendations you have on the right to repair?

[Emily Holtby]

We are particularly pleased with Bill C-244 and Bill C-294, Member Patzer's bill. They were a great first step for the right to repair. Essentially, we needed those amendments made to the Copyright Act before provinces could move on right to repair legislation. Where they stop short, unfortunately, is that they do not mandate that data access requirement from the manufacturers directly to the independent service provider, and there's no enforcement in place or regulatory oversight for non-compliance. While they allow an independent shop the ability to essentially bypass the digital lock in order to diagnose and repair, they don't address the actual access issue—and then, of course, proper oversight.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Thank you.

Mr. Gleeson, I have only a few seconds left. If you have anything you want to add that you didn't get to say from your opening statement, you have about 20 seconds, I think.

[Daniel Gleeson]

The only thing I wanted to focus on was that the intention of the government was correct in including phosphate in the critical minerals strategy. What hasn't followed is change to the Income Tax Act, which has excluded bedded deposits, effectively excluding sedimentary phosphate. Sedimentary phosphate is where 90% of the world's fertilizer comes from.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Gleeson. We're going to have to end it there.

Thank you very much, Mr. Kelly.

Mr. Sawatzky is generously allowing me to ask a brief question before I turn it over to him.

Mr. Arcand, it's actually for you.

In your opening remarks, you said, “Since last January, Canada has lost [over] 57,200 factory jobs.” I'm just wondering if you can briefly paint a broad picture as to which regions that's happened in and the sectors that have been most affected.

Thank you.

[Alan Arcand]

Most of those job losses have occurred in Ontario. The three provinces with the largest declines are Ontario, Quebec and B.C. The fact that the hit has largely occurred in central Canada shouldn't be a surprise. It's where the industries being hit with section 232 tariffs are largely based: steel, aluminum and autos. The impact of the tariffs is really a central Canadian story.

Of course, at the same time, duties on softwood lumber have increased. That's another story that's not heard about as much, but it's also affecting employment in B.C.

[The Chair, Liberal, Karina Gould]

Thank you so much.

Now I'll turn it over to Mr. Sawatzky.

[Jake Sawatzky, Liberal, New Westminster—Burnaby—Maillardville, BC]

Thank you, Chair.

Thank you to the witnesses for coming today.

Mr. Gleeson, I have a few questions for you.

Strengthening domestic supply chains has become increasingly important across several sectors of the economy given the global disruptions that everyone is facing. How does a stronger domestic phosphate industry benefit Canadian farmers? What impact could that have on fertilizer affordability, supply reliability and agricultural competitiveness?

[Daniel Gleeson]

I think the first thing to point out is that Canada is fully self-sufficient in nitrogen, calcium and sulphur. The only thing we are 100% reliant on for imports is phosphate. Having a domestic source of phosphate fertilizer effectively creates a more cost-effective product that is regularly and reliably available in Canadian dollars. It helps the farmer prevent the price shocks they seem to have been absorbing day in and day out from the political conflicts and situations globally. Having that access to cost-effective fertilizer is ensuring that they're consistently growing a crop with the right yields and at the right profitability, which ultimately flows through to the consumer at the dinner table. Having that consistency and cost-effective access to fertilizer is just another way of reducing the risks that farmers face every single day in what they do.