In Canada, Is it more likely for faculty members to allocate funds for a PhD applicant than a master's applicant?
You friend might be right as well as the advisors you have contacted with.

It is true that a master's student is less likely to be productive (in terms of publications) compared to a PhD student.
Therefore, even if you are an above-the-average applicant, the advisor would not want to allocate funds for you. This is because when your time for productivity comes, you will finish your master's, you might go to another university for PhD. Therefore, allocating funds for a PhD student is more likely.

The advisors that you have contacted with might really have insufficient funds.

However, the solution for this problem, I think, is not applying for a PhD programme. Rather, you may state that you intend to continue your PhD in the same university, in case they do not want to invest into a master's student.