NDVA Committee Meeting

STANDING COMMITTEE ON NATIONAL DEFENCE AND VETERANS AFFAIRS

COMITÉ PERMANENT DE LA DÉFENSE NATIONALE ET DES ANCIENS COMBATTANTS

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, April 28, 1999

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[English]

The Chairman (Mr. Pat O'Brien (London—Fanshawe, Lib.)): I would like to call to order the meeting of SCONDVA, the Standing Committee on National Defence and Foreign Affairs. That's Veterans Affairs; excuse me. We've been having so many joint briefings on Kosovo with General Henault and others that I almost forgot we aren't the committee on national defence and foreign affairs, but indeed the Standing Committee on National Defence and Veterans Affairs. So excuse the slip, but we've certainly been having our share of briefings and quite a bit of opportunity to get information on the events unfolding in the former Yugoslavia.

Just before I go to the minister and the witnesses, as the members know, our regular clerk is having some health difficulties, so until Mr. Morawski is able to return, we welcome Mr. Richard Dupuis as the interim clerk of this committee.

Welcome to you, sir. We're glad to have you here.

I'll now put on the record formally the request we had from the media that this meeting be televised. We were not able, on short notice, to line up the room in Centre Block, but I have no problem, as chair, and unless I hear any objections from the members, I'm going to ask the media to try to be as unobtrusive as possible in televising what parts of the meeting they would like. I checked with the minister, and he certainly has no problem in having the media here. So I think we're clear to proceed on that basis.

Let me now welcome the Honourable Art Eggleton, Minister of National Defence.

Welcome to you, sir. Would you like to introduce your staff?

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Hon. Arthur C. Eggleton (Minister of National Defence, Lib.): With pleasure, Mr. Chairman. Thank you to you and the committee members for giving me this time this afternoon.

I am accompanied by an all-star lineup. You know of course the Chief of Defence Staff, General Maurice Baril. Also with me is the Deputy Minister of the Department of National Defence, Jim Judd.

General Ray Henault you see every day at the technical briefing, to which, by the way, everybody is welcome, from all parties, to come and participate and ask him questions. You see him either there in person or on television.

We also have the Vice-Chief of Defence Staff, Admiral Gary Garnett.

Also here are Dr. Ken Calder, our assistant deputy minister in charge of policy; Pierre Lagueux, our assistant deputy minister in charge of materiel—in other words, the procurement process; and Bob Emond, our assistant deputy minister in charge of finance.

So for anything I can't answer, I have good backup.

Mr. Chairman and members of the committee, the main focus of our discussion today is the “Report on Plans and Priorities”, which is part III of the estimates, for the fiscal year that began April 1, 1999 and goes to March 31, 2000. That document highlights the major contributions made to Canada by the Canadian Forces and the Department of National Defence over the past year, and it provides an overview of our priorities for the future.

This year's estimates mark a significant turning point for the Canadian Forces, as it is the first time—the first time—in over a dozen years that the defence budget has been increased. This begins to allow us to refocus our attention on planning for the long-term future of the forces.

The last fiscal year, 1998, was a significant year for the department and the forces, and if the first few months of this year are any indication, 1999 will prove to be even more so.

Above all, throughout 1998, the Canadian Forces continued to respond effectively to crises at home and abroad. Also, 1998 was the year when many of the reforms put in place over the last few years began to take hold, began to make a difference.

We continue to implement one of the most sweeping sets of reforms that has ever been introduced in any organization in Canada, public or private. These reforms affect in some way virtually every member of the department and the Canadian Forces, and the activities they carry out on behalf of Canadians. Let me note a few of the major accomplishments.

In 1998 Parliament approved the most extensive amendments to the National Defence Act in its history. The focus of the change was the military justice system. As these changes come into effect over the coming months, I am confident that Canadian Forces members will view military justice as more fair, more transparent, and more effective than ever before.

In June I appointed Mr. André Marin the first-ever department and Canadian Forces ombudsman, to provide another level of conflict resolution for military members and civilian employees who need help or who believe they have been treated unfairly. I'm now assessing Mr. Marin's detailed proposal for the organization and operation of his office and expect to finalize these details in the coming weeks.

In October I tabled in the House the Chief of Defence Staff's first-ever annual report on the state of the Canadian Forces. This report and Mr. Marin's appointment are two concrete examples of our ongoing commitment to achieving greater openness, transparency, and fairness of the defence organization.

In November I established a new ministerial advisory board on gender integration and employment equity. Chaired by Sandra Perron, its primary purpose is to provide me and the senior military leadership with advice on those issues as we pursue our goal of a more equitable Canadian Forces, regulars and reserves, better reflecting the population of Canada. I will make the board's annual report public.

A new military police complaints commission and a new Canadian Forces grievance board will be established once the necessary implementation process is complete. It's well under way.

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These are only a few of the measures we have taken to reform the Canadian Forces and shape them for the new millennium.

[Translation]

We are on the right track, we are making significant progress and we will continue our efforts.

[English]

To monitor the implementation of all these reforms, I established an independent, external monitoring committee mandated to provide regular public reports on the progress of change. I wanted to make sure focus and attention stayed on those reforms. That committee, chaired by the Honourable John Fraser, a former distinguished Speaker of the House of Commons, submitted its second report in November 1998, and it was made public at that time. It clearly showed that on a vast majority of the recommendations coming out of numerous reports, including the Somalia commission, substantive progress was being made.

On the operational front, 1998 was also a very significant year. At home the Canadian Forces mounted the largest-ever peacetime deployment since the Korean War to help deal with the effects of the ice storm in eastern Canada. They also helped fight forest fires in British Columbia and Alberta. They provided assistance to citizens of eastern Ontario in danger of flooding. And they spearheaded the recovery operation mounted in response to the very tragic crash of Swissair flight 111, off Peggys Cove in Nova Scotia.

On the international scene, Canadian Forces personnel were deployed to the Balkans, the Central African Republic, and the Persian Gulf to contribute to international peace and security. The Canadian Forces Disaster Assistance Response Team, DART, accompanied by Griffon helicopters, was deployed for the first time ever to Honduras to aid those who were devastated by Hurricane Mitch. They did a terrific job in their first deployment. In Italy, Canadian Forces personnel helped respond to the devastation caused by major flooding and mudslides in the Sarno region.

Other Canadian Forces commitments outside Canada continued on. For example, under the auspices of the UN, NORAD, and NATO, 2,000 Canadian Forces members served in some 18 missions around the world. A further 2,000 sailors were routinely deployed on the high seas to operate in support of Canada's interests around the world. Overall, CF personnel served in 45 countries.

Mr. Chairman and members, you more than anybody else in Parliament know that the quality of life of the men and women of the Canadian Forces is a subject that has preoccupied us in recent years. The quality of life study that this committee carried out clearly showed your dedication to the men and women of the Canadian Forces and their families. Indeed I would add that your thoughtful report on these issues was one of the most important accomplishments of 1998.

Let me express to all of you my personal gratitude for that effort. Your report was instrumental in allowing us to make the case within the government, within the cabinet, and to the people of Canada on these important people issues.

As you know, in February the Minister of Finance announced $175 million of new funding in budget 1999 for the quality of life initiatives. And just last month I tabled in the House the government's official response to your report.

The government is delivering on its commitment to CF members and has introduced a comprehensive quality of life package. We have listened. We have listened to you, we have listened to the people, and we are taking action. One of my top priorities continues to be to deliver on these quality of life measures.

[Translation]

On another front, we also made significant progress in terms of equipment acquisitions last year.

[English]

In January I attended the event marking the delivery of the last 100 new Griffon utility helicopters. In April we signed a contract to purchase 15 Cormorant search and rescue helicopters, and in the same month I announced the acquisition of four modern diesel electric submarines from the United Kingdom. The navy also took final delivery of 12 Maritime coastal defence vessels, and in September I participated in the rollout ceremony for the first of 360 new armoured personnel carriers destined for the army.

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Though we have accomplished much over the last year, it is equally important to look to the future and to the major challenges that lie ahead for the Canadian Forces and the department. As the world continues to change, our defence institution must continue to adapt itself to the new realities. We are building on a solid foundation.

As we approach the next century, the most important and enduring priority for the department and the forces is ensuring the ongoing operational effectiveness of Canada's military. Four pillars are crucial to the success of our military in terms of both capability and morale. These pillars are: people, training and education, equipment, and leadership. In order to maintain operational effectiveness, we must strike the right balance amongst these pillars. I am determined to achieve and maintain the highest standards possible within each of these areas—a total, quality service.

There is one area I'd like to examine more closely. Fortunately, you, the Auditor General, and the Standing Committee on Public Accounts have already become engaged in it. I'm talking about the procurement of equipment and services for the department and the Canadian Forces.

As you know, each year the department devotes significant dollars and capital spending to provide the forces with the tools and the equipment necessary to effectively conduct their missions. In his April 1998 report, the Auditor General called into question the department's ability to use the funds available for modernizing its capital equipment in the most effective manner. He further warned about the potential possibilities of rust-out.

In spring 1998 the public accounts committee examined the relevant chapters of the Auditor General's report and made several useful recommendations. Last month we tabled the government's response to that report as well, indicating that we fully endorse the committee's recommendations and have taken steps to address those issues.

For example, risk management techniques, conflict scenarios, additional performance indicators, and more comprehensive priority-setting exercises will improve the capital acquisition process. We have also developed and adopted a new business planning process to better match defence resources with defence policy objectives. This will help us to make better decisions.

Your committee has embarked on a study of the government's contracting and procurement policy. Some common themes are already emerging in the hearings with government officials and industry representatives. We are aware that some previous reform initiatives have not fully addressed key problems. I look forward to reading your report, particularly your recommendations on how to simplify the system while still maintaining its integrity, and how to make it more responsive to our needs.

With the scope and the variety of goods and services procured by National Defence, it's the one federal institution that would be a natural to lead the introduction of innovative procurement reforms. It only makes good sense for us and good sense for the Canadian taxpayer.

To carry out their missions, the Canadian Forces need the right equipment at the right place at the right time and operated by the right people. While we've made important equipment acquisitions over the last few years, other major pieces of equipment in the inventory are nearing the end of their useful life—none more so than the fleet of Sea King helicopters.

Replacing the Sea King must be our short-term equipment priority. The government is actively engaged in examining its options for Maritime helicopters and in putting the final touches on a procurement strategy. I hope to be in a position in the near future to announce how we plan to proceed.

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We also need to modernize our CF-18 fighters and Aurora long-range patrol aircraft. We plan to proceed with these projects incrementally, replacing outdated systems and equipment on a phase basis over a number of years, which is a better way to plan the financing of doing this than to have it all done at once as a major capital project.

Beyond this, we are actively looking at ways to ensure the Canadian Forces have long-term access to modern military satellite communications. With forces deployed around the globe, as I mentioned, in some 45 countries, we recognize that effective communication is one of the keys to success in our operations.

Turning now, if I may, to communications of another sort, communicating openly and clearly to all Canadians, including those within our own organization, remains a high priority. A number of measures have been taken to improve communications and make the department and the forces more transparent. I've already mentioned some of them. Last year also saw other firsts in our efforts to achieve greater openness. Like the CDS, the Canadian Forces provost marshal tabled her first annual report, something many would have thought unthinkable just a few years ago.

Other measures aimed at improving communications include the adoption of a new public affairs policy, the creation of public affairs regional offices across the country, and the publication of The Maple Leaf, the Canadian Forces internal newspaper. We also greatly improved both our Internet and Intranet sites, and they are now even more effective tools for communicating with our own members and with the Canadian public.

As we approach the new millennium, the department and the forces are grappling with three separate but related challenges in addressing the year 2000 issue, the millennium bug. One dimension is to ensure our own critical systems and equipment are made Y2K-compliant and that adequate measures are in place to deal with the situation. We are also developing, on behalf of the federal government, a national contingency plan for possible Y2K problems, particularly those that might affect critical national infrastructure.

The final dimension of the Y2K challenge is to prepare the CF in the event that they are called upon to assist civil authorities, such as what they did during the ice storm. This effort, called Operation Abacus, is designed to ensure the forces will have the optimal capability available to respond to requests for assistance. In other words, we are doing everything necessary to make the Y2K issue the last headache of the 20th century rather than the first major operation of the 21st.

As we look to the future, maintaining the right balance among people, equipment, training and education, and leadership brings us face to face with the emerging revolution in military affairs. It is not, as some people are inclined to think, merely about the application of new technology, although that's a key element of it. It's also about changes to doctrine and the way in which military organizations are structured.

[Translation]

In other words, it is about changing the way military operations work.

[English]

We must understand the ramifications of that concept for Canada, focusing on the absolute necessity to maintain interoperability—a very key word, interoperability—with our allies. We must move forward in close consultation with our allies, and that is precisely what we are doing.

Mr. Chairman, 1998 was a very demanding and challenging year, and 1999 has already presented us with a significant challenge in the form of the ongoing air campaign over Yugoslavia and our efforts on behalf of the people of Kosovo, which we are doing in concert with our NATO allies.

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The years ahead will bring their own challenges, but they will be met and surmounted by the dynamic and responsive men and women of the department and of the Canadian Forces, civilian and military, who are fully committed to defending Canada's values and interests at home and abroad.

Thank you very much. Merci beaucoup.

The Chairman: Thank you very much, Mr. Minister.

There is a vote. The clerk has checked. All members are being asked to be in the House. We would need to leave at about 4.05.

From the chair, thank you very much for the succinct overview you gave us, Minister. I think all members on this committee appreciate your kind words about the quality of life report. I think I can say for members on both sides that we applaud your leadership in tackling that file and helping to get the resources.

The response of the government to the quality of life report of this committee was pretty darn to the point and much appreciated. We tried to depoliticize it as much as possible. That was largely the work of the chair, my colleague, Mr. Bertrand, now your parliamentary secretary. However, as these things unfold, I had the honour and pleasure of leading through the clause-by-clause, which I found very useful and as non-political as we could make it. Members on all sides contributed to it. Indeed I was pleased to table that report.

I think I can say for all members here on both sides that we appreciate your leadership in taking that report and running with it to cabinet and getting the resources necessary to start to implement that important report. So thank you for your kind words and for your succinct overview today.

I would just say to colleagues that first and foremost the minister is here to discuss estimates. I want to begin our normal round of questioning with estimates, but in fairness to all members and to the minister and his staff, I want to deal with the estimates in totality. Let's have all questions on estimates. We will go by our normal rules.

Then when members have exhausted questions on estimates for the minister and his staff, I know he's more than willing to entertain questions you may have about other matters of major importance now. But I don't want to go back and forth between estimates and other questions.

Mr. John O'Reilly (Haliburton—Victoria—Brock, Lib.): On a point of order, Mr. Chairman, are we going to have time for questions, or are we going to come back?

The Chairman: Well, we won't have time before we have to go to the House. I'm just setting up the ground rules for when we return.

Mr. John O'Reilly: Yes, because if we start questions now—

The Chairman: Oh, no. I don't propose to start now. We really wouldn't have time. I think the vote is about 10 minutes away, and they do expect all members. They know the minister is here and they still want us in the House.

So I guess we have to break now. We'll come back following the vote.

Mr. David Price (Compton—Stanstead, PC): Can I just make a suggestion?

The Chairman: Sure.

Mr. David Price: I don't know if this is possible; I know we don't like to talk about twinning too much.

The Chairman: Right.

Mr. David Price: But in this case, since we have a whole group gathered here, if people would be willing... I would be willing to stay here and leave the vote go by.

The Chairman: Okay.

Mr. David Price: You can take the number of members required on the other side to balance out in the House.

It's just questioning.

The Chairman: Colleagues, do you have any reaction to that?

Mr. John O'Reilly: The people who have to leave aren't going to be able to ask questions, so obviously that's not fair.

Mr. David Price: Actually it would work out the other way. You will get a chance to ask questions that way, because we'll run our time through.

Mr. John O'Reilly: Yes, but then if we're not here, we won't know what to ask and we won't know what the answers were.

Mr. David Price: It's a suggestion.

The Chairman: We respect your suggestion, but I think I'm hearing from the members that they want to be in on the full discussion. So thank you, Mr. Price.

Minister, thank you very much. I'm sorry we have to recess now briefly. We'll come back following the vote. Thank you.

• 1559

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The Chairman: I'd like to reconvene the SCONDVA meeting with the Minister of National Defence, the Honourable Art Eggleton, and his staff.

The minister has just made an overview statement, and we'll now go to questions. The minister has indicated to me that he does have a pretty firm deadline of 5.30 to leave. His officials can stay behind if we would like, or he said he would be willing to come back.

It was unfortunate that we had the vote to interrupt the meeting. I don't know why the Reform Party felt that was crucial, but it seemed they felt it was crucial we leave this meeting to go and vote on a routine matter. I'm not sure what the point was, but anyway, there we are.

There's been a request from one of the members that we go with a five-minute round rather than the normal 10-minute round. I'm in the hands of the committee. Is there any objection to beginning with a five-minute round rather than 10? If there are no objections, then we'll start with a five-minute round.

[Translation]

Mr. Laurin.

Mr. René Laurin: (Joliette, BQ): Mr. Chairman, I'd rather have a single ten-minute round than two five-minute ones so we can conduct our questioning with some logic.

[English]

The Chairman: Okay, so you're proposing our normal 10-minute round and not having a second round.

Mr. Price.

Mr. David Price: I have another suggestion. I was going to say, on our second five minutes, maybe we could not go back and forth all the time, because then being at the end of the line eliminates my—

The Chairman: Okay. We're getting into some variations and using up some time, so maybe we'd just better start into our regular round. We'll start with a 10-minute round.

I don't see Mr. Hart, so I'm going to go to

[Translation]

Mr. Laurin from the Bloc Québécois, you have 10 minutes.

Mr. René Laurin: Thank you, Mr. Chairman.

My first question relates to the purchase of materiel. We are still waiting for a decision on the maritime helicopter procurement program. Can the minister inform us when this decision will be taken? Once it is done, will tenders be called before awarding the contracts? The whole procedure strikes as is very long. Why does it take so much time, particularly for the maritime helicopter procurement program?

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[English]

The Chairman: Monsieur Laurin, do you want the minister to respond now or do you want to ask a few questions?

[Translation]

Mr. René Laurin: Would you rather have me ask all my questions?

[English]

The Chairman: No, no, it's your preference. We'll go to the minister then, and he can respond.

Mr. Arthur Eggleton: The helicopter replacement for the Sea King, the Maritime helicopter project, is more complicated than the one we just completed in terms of search and rescue.

In search and rescue, we were essentially looking for an airframe, a commercial off-the-shelf helicopter that we would put our search and rescue equipment into. Given the nature of our search and rescue equipment, it was not that difficult a task. We had to have the right size of helicopter, of course, to be able to get the equipment in.

But on the Maritime helicopter, the mission equipment, the systems that are put into the helicopter, are at least equally important to the helicopter itself, the airframe itself, because in effect it's becoming an extension, as it is most frequently used, of the frigates. These go on the back of a frigate, and for about 10% of the cost of the frigate, we can extend the surveillance capability of that frigate 14 times—14 times. So it's an extension of that kind of surveillance operation based in the frigate, which is a state-of-the-art piece of equipment. It's amongst the best in the world. So we need to have state-of-the-art equipment in the helicopter that complements the frigate.

We also have seen changes in our mission since the end of the Cold War. A lot of what might have been relevant during the Cold War is not relevant today. So it's taken some time to go through and determine the particular details of the mission system we need and how it complements the frigate.

So there are two very key components to this purchase, and it does take some time to be able to put all of this together. But I can assure you that in the Department of National Defence and in the Canadian Forces, they are moving this file along, and I am expecting to very shortly have the information I need, in terms of a statement of requirement, so that we can then proceed to finalize the procurement strategy.

[Translation]

Mr. René Laurin: Can we expect to have a decision before the end of the session in June, Mr. Minister?

[English]

Mr. Arthur Eggleton: Well, yes, I'm hopeful. It takes a fair number of years of lead time before you actually get the helicopter in place and operating, so I'm anxious to move on this just as quickly as I possibly can.

[Translation]

Mr. René Laurin: With respect to the report on the quality of life, the 1999 budget notes that $175 million will be assigned to this heading as supplementary estimates. We also know that you will have to come up with some $350 million through reallocations in the present Defence budget for you to be able to keep your promises, Mr. Minister.

Where do you expect to find the necessary funds for quality of life purposes and what will the impact of such reallocations be on the programs where the funds are taken from? Three hundred and fifty million dollars is a lot of money.

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[English]

Mr. Arthur Eggleton: Actually the total we require is some $538 million. We received $175 million, specifically earmarked for quality of life purposes, in the budget. But that's not the only new money or incremental money we received in the budget. We received an amount for inflation. We received $150 million for a one-time-only funding cut that had been made the year before; that has now been restored. Plus, some of the funds for the pay increases, which is the biggest single component, actually come from the Treasury Board, from central funds. When you look at all of this in total context, we can meet the requirements.

By the way, we'd also started to implement a good portion of this. About $285 million had already been programmed from the start of implementation even before this current fiscal year. We have had a quality of life project office in the department for some period of time and have been moving on these projects. Previous pay increases we gave are also indeed a part of all of this.

So when you put it all together, yes, we can get the money we need to be able to implement quality of life, and we can do it without having to cut any staff resources for purposes of quality of life.

[Translation]

Mr. René Laurin: How do you plan to fund the military operations in Kosovo? Once again, what will the impact of this mission be on the present Defence budget, particularly if the conflict were to last for a few more months?

[English]

Mr. Arthur Eggleton: We do have a sum of money in our budget every year—it's $125 million at this point—that is put in for purposes of special operations. What we would do is draw on that fund to start with, and after we run out of money in that fund... And I can tell you it's happening. It happened last year because of the ice storm, and it's going to happen this year because of Kosovo and other special operations we've been involved with. You can't foresee some of these disasters that occur and therefore can't budget for them. So beyond that $125 million, I go to the Treasury Board. We go for funds from the central treasury.

[Translation]

Mr. René Laurin: Mr. Minister, you just said that you could obtain this money in the same way as you did for the ice storm. Is this the sum indicated next to the heading Mutual Aid on page 9-6 of the Main Estimates? Under the heading of Mutual Aid, provision was made for $260,000 in 1998-99 and the forecast for 1999-2000 is $5,343,000. What is the explanation for this increase?

[English]

Mr. Arthur Eggleton: Which document are you looking at? I was looking at part III of the estimates.

[Translation]

Mr. René Laurin: It's on page 9-6 of the French version of the Main Estimates (page 15-6 of the English version), parts I and II, under the heading "Transfer Payments, Department/Forces Executive, Mutual Aid".

[English]

Ms. Corinne McDonald (Committee Researcher): From the estimates.

[Translation]

Mr. René Laurin: In parts I and II of the Main Estimates.

[English]

The Chairman: Parts I and II.

Mr. Arthur Eggleton: I understood we were talking about part III, so I brought part III. Can you give me an indication again about the specific areas? I don't have the reference.

The Chairman: I think we might have it here, Mr. Minister.

[Translation]

Mr. René Laurin: The Main Estimates gives us a much clearer and detailed description of expenditures.

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You also indicate under the heading "Contribution to the Provinces for assistance related to natural disasters" the amount of $376.5 million for 1999-2000 whereas no provision had been made for 1998-99.

[English]

Mr. Arthur Eggleton: Okay, now I got you.

[Translation]

Mr. René Laurin: Do you plan to use the surplus amount from this budget to fund the Kosovo mission?

[English]

Mr. Arthur Eggleton: No. That's the DFAA, the disaster financial assistance arrangements. They've changed the way they have budgeted for it. Previously it's come in the supplementary estimates. Here they put it into the main estimates this year.

It's a pass-through. It's not really part of the defence department's everyday expenditures on which we operate our programs and services. It has more to do with my position and responsibility for emergencies. The disaster financial assistance arrangements are a pass-through. It comes from the central treasury and it goes through us to the provinces to reimburse them for the expenditures of the programs they've had, such as the ice storm, the Saguenay, or the Red River in Manitoba.

Last year actually over $400 million was spent in the program, but it wasn't put into the main estimates; it came in the supplementary estimates. This year they decided to put the $376.5 million into the main estimates. That's why there is this difference.

[Translation]

Mr. René Laurin: Thank you.

[English]

The Chairman: I'm going to go now to Mr. Hart from the Reform Party for 10 minutes.

Mr. Jim Hart (Okanagan—Coquihalla, Ref.): Thank you very much.

Thank you, Mr. Minister, for appearing today. I know you're very busy, as are your staff at National Defence headquarters.

I would like to make certain we make mention of the men and women serving in Aviano right now and pass along our best wishes to them, and also to the 800 troops that have been assigned to travel to Macedonia to participate in future peacekeeping missions.

I would like to make a brief comment about your statement. You have taken credit for a minuscule increase to the defence budget. I would like to point out that if you wish to do that, you should also recognize the fact that this government has reduced the defence budget by some $500 million a year since you took office in 1993. From the estimate document itself, it says the budget has declined as operational tempo rises. That certainly is the case as we find ourselves in this crisis facing our troops right now.

So Mr. Minister, I would first like to talk about our capabilities as a Canadian Armed Forces, in particular because our air force's capabilities are being stretched to the maximum right now. The 1999-2000 estimates indicate that about $103 million has been allocated to the purchase of advanced air-to-surface missiles, or I think they are referred to as precision-guided missiles. Given the fact that we've probably already run about 400 sorties, maybe more, surely the stocks have been depleted for these munitions. We have been told that our CF-18s already use a combination of the precision-guided missiles and the dumb bombs.

How much of the stock has already been used? Are efforts being made to replenish our supplies of smart munitions? And if CF-18s switch to delivering the dumb bombs, does that entail more low-level operations, and could you tell us how that adds to the risk of our CF-18 pilots?

Mr. Arthur Eggleton: First of all, I appreciate your remark about the men and women in Aviano and of course those who are heading to Macedonia. I had the opportunity to go to Aviano not too long ago, and I did express, on behalf of all parliamentarians and the government and the people of Canada, our support for them and our appreciation of the work they're doing in carrying out the will of the people of this country and the government of this country with respect to the mission.

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With respect to the reduced defence budget, yes, for a number of years, both in this government and in the previous government, it was being reduced. We reduced it for the first number of years we were in office, because it was part of reducing all government expenditures so that we could get the deficit under control and eliminate the deficit. That's been a singular achievement of this government that has been very vital for the turnaround of the economy of this country. It has of course necessitated doing some painful things in terms of cutting the budget.

But I do note that in the last election campaign, the Reform Party, on page 8 of Fresh Start, said let's reduce it another $1 billion; in The Taxpayers' Budget of February 21, 1995, on page 43, it said let's reduce defence another $1 billion; and in the Zero in Three budget proposal of November 24, 1994, it said let's reduce defence another $1 billion.

The Reform Party seems to pride itself on carrying out its promises and doing the things it tells people it's going to do, so I take it that if they had ever formed the government, they'd still be reducing the defence department budget, because that's what they promised Canadians when they went to the voters in the last election.

We've taken a very responsible approach to all of this. It hasn't been easy. We have found many ways of creating greater efficiencies in our operation to be able to do the kinds of things we want to do in defending Canada, working with the United States in defending the North American continent, and working with our partners in NATO and the UN in contributing to international peace and security.

And as I indicated to you earlier, in spite of all of this, we've been able to find funds to buy a number of major pieces of equipment. We've been able to give the pay increases. Look at the pay increase we gave to privates: 14.4%. And we've had a very good response to the quality of life measures. So we have really turned the corner.

And we got, for the first time in a dozen years, additional money. That is helping us to build a very strong foundation for the Canadian Forces in the future. But if we'd followed the Reform Party, we'd still be reducing the budget of the defence department.

With respect to the capabilities of our troops in Aviano and the air force, let me tell you something. When I was in Brussels a little over a week ago, I saw General Mike Short. He's the NATO air commander; he's commander of the air campaign. He says our people are well trained and well equipped. He called them first-teamers. In other words, he's saying the Canadian contribution, in terms of the people and in terms of the equipment, is on his first team. That says something for their capabilities.

In terms of precision-guided munitions, as the stocks go down, additional stocks are provided. Dumb or gravity bombs—in other words, ones that don't have the laser-guided equipment on them—have also been used. I'll let General Baril or General Henault describe a little bit more the circumstances under which they're used, versus the precision-guided munitions.

General Maurice Baril (Chief, Defence Staff, Department of National Defence): Before I pass it to our expert fighter pilot here, I'll give you the description of the difference between a gravity bomb and a precision-guided ammunition by looking at this place.

From very far and very high, our pilot can choose which window of this building to drive the bomb into with precision-guided ammunition. But from the same distance and the same height, he'll choose the building with the gravity bomb. It doesn't mean he has to go lower. The lower he went, the better precision he would get, but at that time he'd use precision-guided ammunition.

So we're using different types of ammunition to attack or destroy different types of targets, and we're not going to use the expensive one if it can be done with a gravity bomb. My expert may have a more technical description, but that's the way I've seen it used.

Mr. Jim Hart: Okay.

Lieutenant General Raymond R. Henault (Deputy Chief, Defence Staff, Department of National Defence): The CDS has described the delivery methods very accurately. I can tell you the delivery of non-precision munitions, certainly in the current context, can be done either visually or using radar designation. In both cases, they can be done from medium to high altitude, and that's what they're doing. So it's exactly as described. The risk is not increased at this stage.

• 1655

Mr. Jim Hart: And what about the question with respect to the stocks of ammunition and whether there is additional funding expected for replacing those munitions?

Mr. Arthur Eggleton: I thought I'd answered that, but do you have anything you want to elaborate on that?

LGen Raymond Henault: No, I don't, Minister. I would just say that as stocks are being depleted, through the normal replenishment process, we are replenishing or resupplying the ammunition stocks as we go along.

Mr. Jim Hart: Okay.

Mr. Arthur Eggleton: In fact just the other day I signed an authority for additional stocks.

Mr. Jim Hart: Since I only have a minute and a half left, I would just like to clarify the Reform Party's position. We have not advocated defence cuts and in fact have advocated better efficiencies at National Defence headquarters, which are long overdue, and have advocated increased spending.

As a matter of fact, Mr. Minister, in 1994 we participated in an all-committee report on the restructuring of the defence department and advocated that funding not fall below $10.5 billion. Since that time, this government has continued to cut the Department of National Defence.

So Mr. Minister, you can blame the Reform Party for your cuts, but you have made the cuts and put our troops in jeopardy.

Mr. Arthur Eggleton: Well, that's not true at all, Mr. Chairman. I'm looking at the Reform Party program from the last election, and I don't understand which part of the word “reduce” the member doesn't understand, but that's what it says here.

Mr. Jim Hart: I think you're looking at your own Liberal document, Mr. Minister.

Mr. Bob Wood (Nipissing, Lib.): I don't think so.

The Chairman: Thank you very much.

We're usually so non-political at this committee.

Mr. John O'Reilly: Hart started it.

The Chairman: Thank you very much, Mr. Hart.

We now go to the majority side, and we have several speakers: Mr. Bertrand first and then Mr. O'Reilly, for 10 minutes of course.

Mr. Bertrand.

Mr. Robert Bertrand (Pontiac—Gatineau—Labelle, Lib.): Just to let you know, Mr. Chairman, I will be sharing my time with the member from Renfrew—Nipissing. We'll each have five minutes.

I have three questions for you, Mr. Minister.

First, in the House of Commons there have been questions about the benefits our troops are getting while deployed in Aviano and Macedonia. Can you tell us if our troops are considered on active duty right now and if an Order in Council is needed before they are sent overseas?

[Translation]

Mr. Minister, could you list the benefits to which our military are entitled?

Although you have already answered my next question, I would like you to repeat your answer so that no doubt can exist. Will the money for the payment of these benefits be taken from the funding earmarked for the improvement in the quality of life of our military?

[English]

Mr. Arthur Eggleton: First of all, with respect to their being on active duty and whether an Order in Council is necessary or not, an Order in Council was put into effect in 1989, by a Conservative government at the time, which indicated that those deployed under NATO commitments are in fact covered by the various provisions—the Pension Act, for example—that provide for these special benefits if there's any injury or loss of life.

A further decision was made by the same government in 1992 that designated specific areas as areas of deployment under that Order in Council. So both of those, as I understand it, would apply, and they would cover our troops there.

As I indicated in the House today in response to the Conservative House leader, I've asked our officials and our legal counsel to double-check, just to ensure that our people are covered, because there's no doubt we want to make sure our people are covered by those provisions.

• 1700

As for specifically what those provisions are, I'll ask the CDS or General Henault, or whoever else wants to get into those details, to answer.

LGen Raymond Henault: In all cases in Bosnia and also in operations over Yugoslavia, we do have special duty benefits or hostility bonuses, which are provided to those individuals based on a set of criteria that establish for us which are the appropriate hostility bonuses for those regions. In the case of Bosnia, it's currently a hostility bonus level 1. For those aircrew involved in operations over Yugoslavia, it's a hostility bonus level 2, which is the highest level they can receive. So in all cases, they are receiving hostility bonuses appropriate to the operations they're involved in.

Mr. Arthur Eggleton: I think that covers the second question.

The third question deals with whether any of the funds we require to do either of those two things or the Kosovo mission in total would affect any of the quality of life program. No, absolutely not. The quality of life program will continue. It's a high priority, and we will implement that.

The Chairman: Mr. Clouthier, there are six and a half minutes left.

Mr. Hec Clouthier (Renfrew—Nipissing—Pembroke, Lib.): Mr. Chair, I'm not by nature a competitive person, but I just have to get into a quid pro quo with my colleague from the Reform Party. He made a rather egregious statement about who's funding what and how much funding is being given toward our military. Everyone knows this government is doing our very best to support our military and will continue to do so.

Correct me if I'm wrong, Mr. Minister, but last year the Reform Party made a rather caustic criticism about our involvement with NFTC, NATO Flying Training in Canada. I'd like you to bring us up to speed, if possible, on how the NFTC is going and our involvement in that project, with our partners.

Also, I know you did mention you were speaking to a particular general over in Brussels, but when you were in Washington and in Aviano, what was the general reaction of other ministers of defence about our involvement with our flyers? Please bring us up to speed on how we're being accepted in the NATO campaign.

Mr. Arthur Eggleton: In terms of NATO Flying Training, a few weeks ago we received some very good news, that the British would become a part of the program and take up to 20 positions a year for a period of up to 10 years. That follows a few months after the decision of the Danish air force to participate as well, and we're getting feelers and indications from some other countries of their interest in this. It could well snowball as people see the great value in this new program.

One of the very clear innovations of this program is that it's a public-private sector partnership. The private sector consortium led by Bombardier, CAE, and a number of other companies is in fact taking much of the risk. They are responsible for buying the planes—both American planes and British planes are being bought for training purposes—and for all of the other infrastructure requirements. They do have, from us in the Canadian Forces, a contract in terms of our obligations to use the services, and of course we help to make sure, through our good training and the expertise of our air force personnel, that NATO Flying Training will have a very high standard of operation.

So it's coming along quite well, and we expect to have it up and operating early next year, with the first students coming probably in February of next year.

The kind of regard our allies have for our air force personnel over in Aviano, as I indicated earlier, came in that comment from General Short. I didn't ask him; he volunteered the information. He said they're first-teamers, they're really well trained, and they're highly qualified.

• 1705

They go out on a lot of sorties. They were there right from the beginning and continue to go out there. They can play more than one role. They have discharged the precision-guided munitions as well as gravity bombs, and they have played other roles, such as escort roles, in the missions that go out.

I meant to say earlier that one of the important things is that when they go out, they have very strict rules about being able to identify the target before they release the weapon, because we want to cut down on the possibilities of collateral damage of any civilian casualties. They were telling me those pilots have a very small time window when they're over there to make that identification and be able to release the weapon in sufficient time. They are absolutely well trained and the most professional possible, and if they can't release it with some assurance of identification, they don't release it.

In fact, with the bad weather that's been over there, out of over 10,000 sorties, release of weapons has come on 3,000, which means a lot of the times they can't. The weather is getting better and the opportunities for hitting those targets are improving.

Not that we're out to keep this going. We'd like to end it just as quickly as we can. The sooner Milosevic comes back to the table or the Yugoslav government comes back to the table so that we can work out a peace agreement, the better. But meanwhile our people are providing a top-notch professional service. They're dedicated to the cause and they know we're behind them.

Mr. Hec Clouthier: Thank you very much.

The Chairman: Thank you, Mr. Clouthier.

Now I'm going to go to Mr. Earle of the New Democratic Party for 10 minutes.

Mr. Gordon Earle (Halifax West, NDP): Thank you, Mr. Chairman.

Thank you, Mr. Minister, for your presentation. I too would like to express my appreciation to our Defence personnel, both the military and the civilian component, for the work they are doing.

I have a number of questions, so maybe I'll throw out the questions so that the minister will know how much time to allocate to each answer.

You mentioned the Canadian Forces ombudsman and that you're assessing his report on his office. As a former ombudsman and having been involved for almost a quarter of a century in ombudsman work, I know one of the principles we hold quite dear is that of independence. Can you tell me if that issue is being looked at—the possibility of the military ombudsman being accountable to Parliament as opposed to being accountable to the minister?

My second question is this. With respect to the operation of that office, which business line in the budget or in the estimates would that office fall under, and how much is the budget for the operation of that office?

You mentioned also an independent monitoring committee that would monitor the many changes and initiatives you put in in 1998. Can you elaborate a bit upon who is on that committee and how the independence of that committee is ensured?

As for quality of life, in the report we put forward, I think the committee had hoped their regional disparities and living conditions would be offset by, and I'll quote:

a non-taxable global Cost-of-Living Allowance (COLA) to be paid to CF personnel posted at locations in Canada.

That was our recommendation 18.

I think in your response to the report, you decided that would not prove an option. I'm just wondering how you would solve that problem of regional disparities among CF personnel, due to the high cost in specific areas.

And finally, if there's time, you mentioned with respect to the Sea Kings that “in the near future”—that was the phrase you used—something would be brought forward. We had some witnesses here not too long ago talking about the fact that the helicopters have been under discussion since 1974 in some form or another, so I'm just wondering if you can be more specific with a date in terms of what “the near future” means.

Thank you.

Mr. Arthur Eggleton: Let me try to go through some of these very quickly.

With respect to the ombudsman, the ombudsman's terms of reference and general terms of hiring were laid out at the time that Mr. Marin was announced as the ombudsman, last June. It is not a classic or institutional ombudsman; it's an organizational ombudsman position. The position reports to the Minister of National Defence. He is accountable to me, and in turn his annual report, and perhaps other reports from time to time, can be made public so that, again, the openness and transparency will prevail.

• 1710

He has come back and given me a report with some 68 recommendations on how he sees moving within those detailed terms of reference, and a lot of those require consultation with other departments. Some of them are not in my jurisdiction to provide in the first place, and some of them could even require legislation, so it has taken a little bit of extra time to go through all of those suggestions. We are attempting now to finalize or at least to come up with some interim terms of reference. We want to get him up and operating just as quickly as we possibly can.

So I hope that before too long—as I said, in a matter of a few weeks—we will have that resolved. But the accountability is still the same accountability as was announced last June; there will be no change in that.

The independent monitoring committee, as I mentioned, is chaired by a former Speaker of the House, John Fraser. Rather than going through all the names, to save time, we'll submit to you and to the members of the committee a list of the names.

Their independence is ensured the same way as a lot of these other matters are: by the fact that their reports become public. They put out a report last November, and it was a public report. I guess it didn't get an awful lot of attention, because it said that a lot of what had been proposed was being implemented, but they weren't afraid to note that there were a few areas where they had some additional concerns.

It's a very distinguished group of Canadians who sit on that committee. They take their mandate quite seriously, and they have excellent credibility to be able to report in an independent fashion.

With respect to quality of life, three major recommendations still require further work. Cost of living allowance is one of them, but it is our expectation to have developed by this summer a plan on cost of living and to be able to put it into effect shortly thereafter.

What we didn't agree with was the non-taxable portion of it, but it's all relative. We want to make sure that, regardless of where they are in the country, we take into consideration these cost of living differences. It was only the non-taxable portion that we were negative about.

We also are developing further long-term solutions. We put $40 million into additional housing—a very substantial additional amount to increase and upgrade our housing—but we're still working more on long-term solutions, which may also include additional authorities to the Canadian Forces Housing Association to be able to develop better housing.

Then there's a pension plan for the reservists that will require some legislation, but the provision for allowing that, I take it, is in Bill C-78, which is the bill presently before the House.

So we still have more work to do, but we are moving in all of those areas. We've agreed essentially with all 89 recommendations. On certain aspects of them, such as non-taxable, no, we didn't. Finance wouldn't go along with that. But we are moving in all those areas.

Now, finally, on the Sea Kings, by “near future”, I mean I think it will be a matter of weeks. We have to proceed with that this year, because remember, the present life extension of the Sea King goes to the year 2005. We're changing some of the engines and doing a number of other upgrading changes to the Sea King so that they in fact will go to the year 2005, so we need to move expeditiously to have the replacement helicopter available by that point in time.

Mr. Gordon Earle: Thank you.

The Chairman: Mr. Earle, thank you.

Now Mr. Price from the Conservative Party for 10 minutes.

Mr. David Price: Thank you, Mr. Chairman.

Thank you very much, Minister, for being here. It's very important that we do get this opportunity.

I'll start right off on the Sea Kings then. You basically have just told us that we can expect them for the year 2005, so we won't have to extend the life any longer on the existing ones.

• 1715

Senator Forrestall received a letter from you dated 3 October 1997, saying we had 21 military personnel and six civilian personnel based in Rockcliffe working on the SOR—or we should imagine the SOR; you didn't actually state that. In all that time—we're talking a year and a half now—we still haven't seen it come forward. As you have been saying, we should see it within the next week or so. In all of that time, we have heard that it has gone back and forth between that group and National Defence, because they couldn't seem to get the act together.

Since the original plan was that these helicopters were to be modular, has it been considered that maybe a platform should be the first thing to be looked at, so that you could spread the cost over more time and then look at the mission systems that go into it, which are changing, as you know, on a steady basis?

As we go year by year, mission systems keep changing. Even for the original set-up of the mission system on it—the major one, the sonar group that was going to go on it—the needs are far less today. We definitely wouldn't have to equip all of those helicopters with that type of system.

So have we been looking at the possibility of maybe breaking up the order—looking at the platforms on one basis and adding in mission systems of different types over a period of years?

I'll ask you the other questions I have, or at least a group of them.

If we look at the estimates here, we see a drop in our troop strength. We're dropping below 60,000, which is basically going against the 1994 white paper. I'd like to know if this is a trend. The other thing that's bothersome in it is we see a lot of the drops are more in the lower ranks than in the higher ranks.

We see an upgrade, a modernization, in the CF-18's radar warning receiver, which is at $6 million, and that goes into a capital expenditure. Yet at the same time we're changing engines on the Sea Kings and the Labradors at a cost of $10 million, and that isn't a capital expense. I'm wondering why the difference, because they are basically both more of a maintenance thing.

The Chairman: Mr. Price, I'm going to suggest maybe you should pause there and let the minister and his staff respond. Then if there's time left, I'll come back to you. Maybe we could go to the minister and his staff. That's quite a group of questions there now.

Mr. David Price: Okay.

Mr. Arthur Eggleton: Let me take them in reverse order.

You said one is $10 million and the other is $6 million, the Sea King upgrade versus the CF-18. For the CF-18 upgrade, I don't know how many projects are involved in that $6 million, but there are going to be several projects over several years. So that's not the entire program.

Mr. David Price: Can I interrupt? Actually, as a line item, the radar warning system is a $6 million item. There are several other additional items going on, plus the upgrade itself, which is $1.2 billion.

Mr. Arthur Eggleton: That's over several years, though.

Mr. David Price: Yes, but still several... This is a particular item at $6 million. It's basically a maintenance item. And then we're talking about $10 million for engines. I'm just wondering why they don't show as...

Mr. Arthur Eggleton: Okay. I'm going to let the staff answer that one.

I'll say two things about the other two.

As for the drop in troop strength, if you're taking it from this document you have in front of you, that's not an appreciable drop. It's not a drop in—

Mr. David Price: Well, that's why I asked if it was a trend.

Mr. Arthur Eggleton: It's not an indication of any policy change. It just is an extension as a result of retirements or people leaving through departure incentives or whatever, and certain positions not being filled at that point in time. It's 59,678. I suspect by the year after that it will be back up over 60,000. So there's really no change in policy that comes out of that slight drop there.

Mr. David Price: Okay.

Mr. Arthur Eggleton: With respect to the Sea Kings, you yourself have talked about the different aspects of the mission systems and the order of the platform versus the mission system, which comes first. You've indicated some of the options and some of the complexities in all of this that the department and the forces are undergoing in determining the perfect statement of requirements.

• 1720

I can tell you I've been getting updated briefings on the statement of requirements, but I do not yet have a final statement of requirements. We're still finalizing the options, but I think we're very close to that.

Perhaps we can get some further response on your questions from staff.

Monsieur Lagueux.

Mr. Pierre L. Lagueux (Assistant Deputy Minister, Materiel, Department of National Defence): Thank you, Minister.

The first question had to do with the Sea Kings and the platform, and perhaps buying mission systems after we buy the platform?

Mr. David Price: Basically what I was looking for is whether we have looked at different options, such as buying platforms, knowing that certain mission systems have to go into it anyway, but knowing also that even in the five years from the time we order to the time we receive, there are going to be changes in mission systems.

Mr. Pierre Lagueux: What's important to recognize with the Maritime helicopter is that in fact what we're looking at procuring here is a total mission system, the helicopter of course being the platform that carries this mission system around. Having a platform without a mission system really does not create the ability to carry out the roles this equipment is required to do from the back of the frigate.

As the minister pointed out in his earlier comments, the idea behind having the Sea King on the back of a frigate is that, for a much smaller cost than the frigate, it can really extend the surveillance capability of the frigate. A helicopter without a mission system in the back really cannot do much more than have people look out the windows, which is not a very sophisticated way of dealing with the threat. But certainly you're quite right about the ability to modularize and add various pieces of kit to it.

Of course the technology always modernizes, so you have to at some point in time pick a system to go into the helicopter. The significant technological issue here is that as you pick your mission system, you must ensure that all these systems integrate together and that the various systems can be used by the operators in the back end of the helicopter. The pilots up front fly the helicopter and you have mission specialists in the back. You need a system that can fuse all this information together.

So we are looking at those options, but we must be careful to ensure that we don't have pieces that don't fit together afterwards.

Mr. David Price: Absolutely. This is why I was asking if we are looking at the possibility of not buying all of those helicopters equipped with all of those mission systems right off, but looking at different modular units.

Also, the set-up of the frigate and the helicopter combined was one unit. That has changed over a period of time. Those systems have changed a bit. Do we really require them for every single frigate right now?

I'm trying to look at a window of opportunity here for us to fit something into the budget so that we can actually buy those helicopters.

Mr. Pierre Lagueux: Certainly all options must be looked at—there's no question of that, Mr. Price—in terms of perhaps modularizing and fitting some helicopters for, but not with, everything. These are all options that have to be looked at.

Clearly though, in our case, the helicopter is a complete mission weapon system that tends to operate independent of the frigate, and if it's going to do the full-up job, it must be fully equipped. Does it have to be equipped in all cases to do all missions? Maybe not, and these are options we certainly will be looking at.

I'll go to your other question on the CF-18. You're quite right that in the case of the CF-18 radar warning receiver, that is capital. It's capital because it's new capability that's being added to the CF-18. It's a particular project, as opposed to the large modernization project we're looking at.

The work we're doing on the Sea King engines is not adding a new capability; therefore it doesn't come under capital. It's really a question of the definition of what is new capability and what isn't.

When I appeared before you some time ago in your procurement study, I talked about the differences between capital and O and M. For the Sea King engines, it's a modification being done to the existing engines; therefore it is not a capital project. It's really a question of what by definition appears under capital and what doesn't. A capability upgrade is capital; sustainment is not.

Mr. David Price: It is a completely new engine that's going into the Sea King.

Mr. Pierre Lagueux: No, no. We're not putting a new engine into the Sea King.

Mr. David Price: We were shown new engines when we were—

Mr. Pierre Lagueux: We are upgrading the engine by taking out sections of the engine and replacing sections of the engine, but essentially we're upgrading. I'm not an engine specialist—I will admit that, Mr. Price—but my understanding is we're upgrading to a different version of the engine. So sections of the engine are being replaced, but it's essentially the T-56 engine, I believe. It is a more modern version of that engine.

• 1725

Mr. David Price: Yes.

The Chairman: Thank you, Mr. Price.

The minister has a deadline of 5.30. We'll start a second round. I'm assuming we're still on estimates.

Members are looking befuddled.

Mrs. Longfield.

Mrs. Judi Longfield (Whitby—Ajax, Lib.): Are we out of rotation?

The Chairman: No, we're not out of rotation. We're right in committee rotation. Now we go to a second round with the Reform Party for five minutes. I'm going to invite colleagues to review the rules.

The minister has a tight deadline of 5.30. We'll go with Mr. Hart for five minutes, and then I'm going to come over to Mr. O'Reilly and Mrs. Longfield.

Just before we do, Minister, will the officials be able to stay behind? How do you want to proceed on that? Would you rather come back?

Mr. Arthur Eggleton: I'm willing to proceed in either way. I do need to take some of the officials with me when I go, because my next meeting involves some of them.

The Chairman: Okay.

Mr. Arthur Eggleton: I could leave some. I'll try to determine who can stay. Or I could come back another time if you wish.

The Chairman: What's the wish of the committee? Do you want to proceed with the officials who can stay behind or have the minister come back?

Mr. David Price: It's already scheduled. I saw somewhere that he is due to come back in May.

The Chairman: That's Veterans Affairs Minister Mifflin.

Let's start then with Mr. Hart anyway, in a second five-minute round.

Mr. Jim Hart: Thank you very much, Mr. Chairman.

Mr. Minister, it's very instructive to the Canadian public that you would choose to use your time here in front of the committee to attack the opposition's policy when in fact it's your policy that has reduced the operational capability of the Canadian Armed Forces.

Mr. John O'Reilly: Get a soapbox.

Mr. Jim Hart: I would point to a number of sources, including General Lewis MacKenzie, who has recently said in the media that the operational capability is not there in our current Canadian Armed Forces for a sustained operation like we could find ourselves in in Kosovo. Yes, our pilots and our crew are the best, absolutely the best, but because of the policies of this government...

And by the way, the Reform Party advocated a $1 billion increase to defence spending, not a cut.

I would like the minister to respond to that. Well, actually you don't have to respond to that. It's not necessary.

But I would like to question you on the capital funding available to the Canadian Armed Forces. It is recognized that as a standard, about 30% of the budget should be allocated to capital projects. Our capital budget appears to be shrinking.

So I'd like the minister to answer, number one, what is the current percentage of capital expenditures in the budget and what will it be in the future—next year? And will we make that 30% target? What is the government's plan to make sure our equipment is updated?

Mr. Arthur Eggleton: First of all, the comments I made before that you didn't like were only in reaction to the comments you made about defence cuts, because I don't think you put it all in the appropriate context. You can say now that since the election—

Mr. Jim Hart: The context is that you've used the Department of National Defence as a cash cow.

The Chairman: Mr. Hart, we have tried to keep this fairly non-political. The meeting was interrupted by what some of us, quite frankly, considered a rather frivolous call for a vote. You've asked a question, and the minister was polite enough to hear it out. Now I ask you for your normal politeness in letting him respond. We're trading some political opinions here, and that's fine, but you weren't interrupted, so I would ask you not to interrupt the minister, and I would ask all members to respect that, please.

I'm going to go back to the minister and let him finish his comment.

Mr. Arthur Eggleton: Well, I'll get off that theme.

Let me point out that in spite of the cuts, in spite of the fact that we've had to, like all departments and services, make a contribution to eliminating the deficit and reducing the debt—and I understand the Reform Party supported our doing that—we have been able to organize this budget in such a way that the white paper provisions are being met. In 1994 it was clearly established what we were to achieve, and that is what we are achieving.

• 1730

You talk about sustainability. As I indicated once previously, when we talked about the number of troops we might send to Kosovo—the 600 to 800, and we're sending 800—sustainability in any of the plans we do is a factor. It's not just getting 800 troops over there, but being able to sustain the operation—in other words, being able to rotate them after six months. That is always a consideration in the numbers we send. If we can't sustain them, then we don't send them.

Somewhere down the line we may well have to say no to some of these missions, or at least we might have to rework the priorities. If something else becomes a higher priority, then maybe we're going to have to take troops away from another operation in order to do that. We haven't had to do that yet, but there's no doubt we are getting close to the limits. In this particular case, we find, at least at this point in time, we cannot sustain something larger than that. Maybe later, when we review this, we might be able to do it, but not at this point in time.

Mr. Jim Hart: For how long can we sustain them?

Mr. Arthur Eggleton: When I talk about sustainment, I mean we can sustain them there—

Mr. Jim Hart: Indefinitely?

Mr. Arthur Eggleton: —well, for as long as the mission lasts. We have to rotate people in and out, obviously, after a six-month period.

Look at some of the peacekeeping missions in the world that lasted an awfully long period of time. It doesn't mean we're going to maintain that level forever. It may be possible to reduce the level eventually. They're talking about—or had been talking about—reducing the level in Bosnia this year, for example. That's put on hold in view of what's happening in neighbouring Kosovo, but eventually there may be an opportunity to reduce the number there. But that's to be considered another day. In any event, that is always considered part of it.

As I think was reported to you before, the capital projects were down to about 18% in the last fiscal year, and yes, that is lower than what it should be. We are in fact adding some additional money this year for capital projects with respect to the army and with respect to the air force. But there's no doubt we need more, and that will certainly be a priority in coming years, to be able to add more to the capital budget.

As we get additional funds, we're able to do that, and I'll certainly be continuing my efforts to get additional funds. But at the same time, as we make the organization more efficient, as we cut the operation and maintenance costs, we're able to transfer those funds into capital equipment purchase.

The Chairman: Thank you, Mr. Hart.

Mr. Minister, under our SCONDVA rules—and I've asked my colleagues to review them to refresh their minds—we now go to the government side, with Mr. O'Reilly. I don't know if you have time for one or two quick questions.

Mr. O'Reilly and Mrs. Longfield, five minutes.

Mr. John O'Reilly: Thank you, Mr. Chairman.

I'm sorry to see partisanship set in. I think, Mr. Chairman, you'd better review whether we're going to have televisions cameras here. It seems once they show up, we have partisanship and everyone wants a soapbox. So I'll try to stay away from that.

The department secured $180 million over two years in loans from the Treasury Board. I want to know what part of these loans have to be paid back and where that is provided for in the current estimates.

Also, what additional funding is required to fulfil the commitment, where is it going to be taken from, and where is it in the estimates?

With regard to the millennium bug, what percentage of the military's critical systems and equipment are fully Y2K, and what is the cost to the department? Is it factored into the budget? What stage is it at?

Those are my questions, Mr. Minister.

Mr. Arthur Eggleton: With respect to Y2K readiness, the latest report of the Treasury Board indicated that in terms of our mission-critical systems, we're 86% compliant. Another report will come out in the last week of May, and we expect it will show us to be well over 90% compliant. We are on track to get to the 100% level by the end of September.

We do have a lot of mission-critical systems. We actually do have more than any other part of the government. In fact we have more than twice as many systems as the aggregate of all other departments. And 90% of those systems are embedded systems, which are harder to test. So in light of that, 86%, going well over 90%, and completed by the end of September is a remarkable achievement.

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We've had to borrow some money from the Treasury Board to do that, which you have pointed out. Mr. Judd, the deputy, will tell us how we're going to handle all that, what the terms and conditions are, where we have to send the cheque, and when we have to send the cheque.

Mr. John O'Reilly: The cheque's in the mail.

Voices: Oh, oh!

Mr. Jim Judd (Deputy Minister, Department of National Defence): That will be the first answer.

The terms of the loan repayment are yet to be negotiated with the Treasury Board, but it would be spread out over several years in the future, beyond the current fiscal year.

Some of the other costs we will have to incur with respect to Y2K planning, particularly on the contingency front—contingency planning, purchase of equipment for that purpose, and so on—we expect to be reimbursed for by the Treasury Board through supplementary estimates over the course of the fiscal year.

Mr. John O'Reilly: Thank you.

The Chairman: You have two minutes, Mrs. Longfield.

Mrs. Judi Longfield: Thank you.

Minister, I'm delighted to hear that we're going to have an RFP for the Sea Kings. Many of us saw those and know they're anxiously being awaited.

I want to talk about some quality of life issues. One of them has to do with the Clothe the Soldier program. Some people were upset about the clothing they had when they were being deployed, and I'm wondering if the members on their way to Macedonia are wearing the latest in Clothe the Solider.

I only have a minute or two, but I also want to know about Operation Abacus. Where are we with that? How many people are working on that project? Will we be ready in the year 2000 if we should need to provide assistance to civilian authorities?

Mr. Arthur Eggleton: Thank you. I'm going to let General Baril, the Chief of Defence Staff, answer those questions.

Gen Maurice Baril: The Clothe the Soldier project is very expensive and very far-reaching, close to $200 million. I should mention that all of our soldiers who have been deployed in operations in the past five years have always been dressed with the best equipment and the best clothing that could be had, from body armour to Gore-Tex stuff. Unfortunately, when they came back, they had to turn it in, because we were rotating. It's not the best thing to do with our soldiers.

Now the battle group that has deployed will keep their equipment when they come back, because the system has now generated enough. Hopefully within a year and a half, everyone in the army and many of the other members of the forces shall be equipped with that equipment. That's the least we can do now. It's a big project, and we have to generate it into the normal supply system. Now it's coming in from the factory.

Should I go on with Operation Abacus?

Mrs. Judi Longfield: Yes.

Gen Maurice Baril: Hopefully we won't have anybody involved on 31 December of this coming year, but if it were required, we could have all the Canadian Forces. But we have approximately 30,000 people earmarked, both reserve and regular, to be involved for whatever emergency we have. The operational headquarters is based in the joint task force that operates in Kingston. They have been together and totally dedicated to the planning, rehearsing, and training for over a year now. They have deployed their headquarters here in Ottawa to test all the communication procedures we have, and they will run a series of exercises to make sure we're ready for the worst case. But we're all hoping for the best case.

The Chairman: Thank you, Ms. Longfield.

Monsieur Laurin, I'm going to ask if you can make it a very brief question, because the minister has to go.

[Translation]

Mr. René Laurin: My question will be very short, Mr. Chairman. I found the reference relating to my question on mutual aid in part III of the Estimates. It's on page 90 of your document. It shows a provision of $2,431,000 in 1998-99 and twice that amount for the 1999-2000 financial year. As a matter of fact, the amounts allocated for NATO infrastructures have been tripled. I'd like you to describe this mutual aid referred to here and explain why the amount must be doubled.

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[English]

The Chairman: Maybe, in view of the minister's time commitments, we could take note of the question, Monsieur Laurin, and then ask for a response to it when they've had a chance to reflect on it.

Mr. Arthur Eggleton: We'll get the answer.

The Chairman: Minister Eggleton, Chief of Defence Staff, and other staff, thank you very much for being here today. We appreciate your willingness to come back, Minister, if the committee so desires.

Thank you very much.

Mr. Arthur Eggleton: I'd be happy to do that.

Thanks very much, everyone.

The Chairman: Thank you.

Colleagues, could we just hold on for one moment? We're through with the witnesses. I would just ask something, though. Within the parameters of how we're allowed to proceed, we've done very well in keeping partisanship on all sides to a minimum, and I would ask us all, on all sides, to try to reflect on that.

Mr. Jim Hart: Mr. Chairman, I have a point of order.

The Chairman: All right. What's the point of order?

Mr. Jim Hart: The point of order is, Mr. Chairman, that my questions were relevant, and it wasn't partisanship to be asking about operational capability.

The Chairman: Mr. Hart, I'm sorry; that's not a point of order.

Mr. Robert Bertrand: That's a point of debate.

The Chairman: That's not a point of order, but it leads to my second point. I'm going to ask members on all sides to reflect on the rules of this committee. I have members on all sides looking at me sometimes, wondering if I'm following the rules of the committee.

Mr. Robert Bertrand: I know the feeling.

The Chairman: I have them here in writing. I'm trying to be an impartial chair, and I'm trying to follow them. So I'm going to ask all members to reflect on what is a valid point of order, what is debate, and what are the rules for asking questions. I'm trying to follow them.

We've been a successful committee to date. I'm going to ask all members to reflect on that. A point of order has to do with the workings of the committee. It can't be a matter of debate.

Mr. John O'Reilly: I have a point of order.

The Chairman: Mr. O'Reilly, okay.

Mr. John O'Reilly: Mr. Chair, I'd like to deal with the method you used today for debate. I thought when the meeting was interrupted, it was the call of the chair to go to shorter questions, which is part of the rules, I believe. You didn't do that, so Mr. Laurin got two 10-minute questions.

The Chairman: No.

Mr. John O'Reilly: And then he got a question at the end.

The Chairman: No, that's not right.

Mr. John O'Reilly: And the people over here didn't get a question.

The Chairman: No, that's not right, Mr. O'Reilly.

Mr. John O'Reilly: That's my point of order.

The Chairman: Well, if we have a minute, let's reflect on it.

That did not happen. Here's the order, and maybe it's worth reflecting on it. The official opposition gets 10 minutes, followed by the Bloc, followed by the Liberals for 10 minutes, followed by the NDP and the PCs for 10 minutes each. That was followed to the letter.

Then the rules of this committee call for a second five-minute round, beginning with Reform. That seemed to cause some confusion on the government side. Then it's the Liberal side, the government side, and back and forth.

I follow this religiously and I followed it today, so I don't understand the confusion.

Mr. John O'Reilly: We were interrupted. You should have gone to the bottom of your rule sheet for the questions, so that everyone had an opportunity. That was my point of order.

The Chairman: Oh, you mean we were interrupted by the House of Commons.

Mr. John O'Reilly: Yes.

The Chairman: No, there's no rule I have that says that's the procedure.

Mr. Hart, you had a point of order.

Mr. Jim Hart: Mr. Chairman, I think you do an excellent job of running the committee; I do.

Mr. John O'Reilly: Oh, yeah, suck up now.

Mr. Jim Hart: No, I'm not sucking up.

I just want to make the point of order that I was trying to ask some serious questions and there was catcalling from the other side of the table, and that's unacceptable. It's unacceptable in the House of Commons. We should have been called to order, and I would appreciate that that be followed. It's unacceptable that such catcalling would come about when I'm trying to probe the minister and get answers to serious questions that are on the minds of Canadians.

The Chairman: Okay, thank you.

Let me comment on that from the chair. I would just say this. My job is to try to be as impartial a chair as possible. I'm going to ask all members on all sides to bear those comments in mind, and I'd ask as well that whoever is posing a question not interrupt. I called you to order once on that, Mr. Hart, and you're normally quite good on that, as are all members.

Maybe we can all reflect on the fact that we're here trying to do a job, from different perspectives maybe. If you trust in my impartiality from the chair, I will try to continue to be as impartial as I can, and I'm going to ask all members to reflect on that.

We have a final point of order from Mr. Laurin.

[Translation]

Mr. René Laurin: Mr. Chairman, I don't know how the other members prepared for this meeting but the notice of meeting we were given indicates that we would be discussing the Main Estimates 1999-2000, votes 1, 5 and 10. There's only one document with that title and it is this one, the one that I studied to prepare my questions. The Minister tells us today that he is ready to deal only with questions relating to part III of the Estimates. It was difficult for me to track down the corresponding reference in part III. Because of all this searching, I missed the answers the Minister gave me and furthermore, the Minister was unable to answer my own questions.

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It is important for our notice of meeting to indicate clearly the document that will be the subject of our study during a meeting. I think that what happened today is unfortunate. I worked for hours to prepare for this meeting only to hear the Minister say that he was unwilling to discuss this document. This is not very encouraging.

[English]

The Chairman: That's a valid point, and it's noted, Mr. Laurin. We'll endeavour to make sure there's no confusion in the future.

In fairness to the minister, he indicated a willingness to come back to the committee and continue the discussion as necessary, so we'll take him up on that opportunity.

So your point is noted, and I will discuss that with the clerk. We appreciate your point. All right?

The committee is adjourned at this time. Thank you.