:
Thank you very much, Mr. Chairman.
I'm here today, of course, to discuss the supplementary estimates (B) for the year 2013-14. This is, as you may know, my first appearance before this committee since I was appointed Minister of National Defence in July.
When the approached me to take on the defence portfolio, I was honoured. Like all Canadians, I'm grateful for the incredible work that our armed forces and their civilian partners do for us each and every day. I've come to understand the remarkable scope of the department's responsibilities.
DND faces unique resource challenges.
[Translation]
We have the biggest budget in government.
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We are the biggest government employer, with approximately 92,000 full-time employees, including over 67,000 men and women in the armed forces.
Support by an integrated defence team consists of a dedicated and committed cadre of public servants as well, a team that does everything from financial analysis, logistics, and procurement to human resources, all with the goal of supporting our men and women in uniform.
DND holds a large number of properties across Canada to support the Canadian Armed Forces, adding up to approximately 47% of federally owned buildings—some 21,000 buildings. That translates into approximately five million acres of land, 5,500 kilometres of roads, and 3,000 kilometres of water, storm, and sewer pipes. That's without even mentioning any ships, aircraft, armoured vehicles, trucks, and so on.
But despite these huge numbers, what has struck me most is the complexity and breadth of the tasks that we entrust to the Canadian Armed Forces every single day, and how they deliver, when and where it counts, as we saw in Alberta during the summer floods, or training Afghan forces as part of our commitment to our NATO partners and the Afghan government, or helping save lives and bringing emergency relief in the immediate aftermath of disasters, as is the case with the typhoon in the Philippines.
It was my honour to personally see off members of the Disaster Assistance Response Team, the DART, when they left for the Philippines within days of that devastating storm. We now have more than 315 Canadian Armed Forces members there, including engineers, medical personnel, helicopter crews, air transport and maintenance crews, logistics personnel, and liaison officers. They have purified approximately 56,000 litres of water and treated almost 2,000 people in need of medical care. They have delivered approximately 6,700 pounds of food on behalf of non-governmental organizations, and they've cleared 113 kilometres of roads. Mr. Chair, simply put, they have saved lives and worn their uniforms with pride.
But to be in a position to do all this requires significant and sustained investment. Mr. Chairman, with the best will in the world, you don't get to the Philippines carrying hundreds of personnel and tonnes of equipment and supplies just with good intentions. It takes a strategic aircraft like our C-17 Globemasters. It's why, since 2006 and the development of the Canada First defence strategy, the government has worked to modernize our core equipment fleets.
[Translation]
It's also a matter of upgrading our infrastructure.
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The government is also working to improve care for our ill and injured military personnel and to ensure that our military is ready and able to respond whenever the need arises, but to do this, Mr. Chair, in a way that's in line with our government's fiscal responsibilities.
That's why in October I met with the entire leadership of the Department of National Defence and the Canadian Armed Forces. We had a full and frank discussion regarding the future. From this meeting we launched the major initiative to bolster front-line investments by reducing inefficiencies, streamlining business processes, and reducing corporate overhead within Canada's defence organization. The process of defence renewal will help national defence continue to build a modern, first-class military, ready to take on the challenges of tomorrow.
As I discussed with the department's leadership in that meeting and others, our focus must be on achieving clear accountability, improving processes, and developing a stronger culture of innovation, a culture that will ultimately ensure that we maintain the support and trust of Canadians. We are finding savings that will be reinvested toward the continued modernization of the Canadian Armed Forces.
[Translation]
Our focus is on front-line capability.
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We put front-line capabilities first because Canadians have high expectations for their armed forces. Not only do Canadians expect a military that is ready to take on challenges down the road, but they expect value for their tax dollars, and that's what they're getting.
Mr. Chair, in our supplementary estimates we are requesting just over $1 billion in requirements, 50% of which is a result of the settlement of the Manuge case, a special circumstance. Of these funds requested, almost half are absorbed through funding that was previously appropriated by Parliament.
In the details of the estimates you will see that they support the training and readiness of Canadian Armed Forces and that they enable our shipbuilding strategy and commitment to the north to move forward by providing funds to design the AOPS and establish the appropriate infrastructure. They will highlight our ongoing cooperation with other departments and government-wide programs with regard to scientific research, security, diplomacy, and defence issues.
Mr. Chair, as we continue through the fiscal year, the Department of National Defence and the Canadian Armed Forces will constantly monitor our fiscal requirements in order to ensure value for taxpayers' dollars. We're keenly aware of the importance of balancing our requirements with the need to protect Canada's fiscal health.
Mr. Chair, we all have a role to play in this, and I'm proud to say that the Department of National Defence is doing its part. We are finding, and will continue to work toward finding, more efficient and better ways of doing our business.
I'm sure the committee might have some questions on the specifics of the supplementary estimates package, and along with the team I have here with me today, I am pleased to listen to the committee's comments and to answer any questions you may have.
Thank you very much.
:
You've touched on a very important aspect of what the members of our armed forces.... I mentioned in my opening remarks the support Canada's Armed Forces provide whenever there's an emergency in this country. I pointed out what took place in Calgary and the surrounding areas and how our armed forces were there and ready and able to help.
Search and rescue, again, is an important and vital component of where members of our national forces assist. I don't want to say we have the longest coastline in the world, but it's got to be pretty close to it. It's a huge undertaking that we have, and there are constant challenges. So, yes, improving the ability of Canada to respond when there is a challenge is one of the vitally important aspects of what we do and what our armed forces do.
Just this past summer, I was with the on King William Island, and much of the briefings and the discussions that we had took place with respect to the ability of our armed forces, in conjunction with the Canadian Coast Guard and others, to respond to the challenges we have. These are unique challenges that we have, but again, I was very impressed by both the level of readiness and the commitment of the members of our armed forces to do that.
As you know, there is a quadrennial review that will be tabled soon on that, and I encourage you, of course, to have a look at that.
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That amount is composed of the following, because there are some important considerations that drive that number.
First of all, we had about a billion dollars in spending authority last year to settle the Manuge case. Unfortunately, because of timing issues, we were only able to spend less than $500 million of that amount. As part of that $1.45 billion, $506 million is associated with the Manuge settlement, which will be spent, in fact, this year.
In addition, because the budget was tabled after the main estimates for 2012–13, there were budget measures that served to reduce the amount of spending authority that Parliament had given us. Included in that $1.45 billion is a further $210 million in spending authority reductions associated with budget 2012.
Further, there's about $250 million associated with capital expenditure that did not occur because of delays in the delivery of the equipment.
All of which to say, Mr. Chair, that there's about $1.1 billion included in that $1.45 billion associated with reductions to our spending authority for reasons that were beyond our control.
At the end of the day, our operating budget carry-forward, an indicator you may be familiar with from other departments, was $356 million, representing 1.7% of our spending authorities, well in line, I think, with other government departments.
Mr. Minister, to follow up on Ms. Gallant's questions regarding the care of ill and injured soldiers, we have a grave concern about the number of suicides occurring among soldiers who have been deployed and come back from deployment. We've had reports of two in the last couple of days.
We also have identified a problem with respect to the military's investigation of suicides. The latest figures show that 50 boards of inquiry, which are supposed to look into these matters to find out what happened, what lessons might be learned, and what things might need to be changed, are still outstanding, some as old as 2008.
Can you tell us why this is an issue and a problem, and why we aren't getting these reports?
We've got the Military Police Complaints Commission looking into one of them, and we're giving them more money here in these estimates, but we still have this serious problem that is tragic in the extreme.
:
Thank you, Mr. Chair, and through you, thank you, Minister, for being here today and for your presentation.
It's very important that we take into account all the infrastructure that we do have. I praise the DART. They make Canada very proud and have highlighted to Canadians the multiple roles that Canadians perform around the world, whether it's peacekeeping, war fighting, or helping people in distress, like in the Philippines.
I'm also very happy to see General Thibault here today. I served on his staff in the past, and I'm delighted that he's with us today.
Minister, these are very complex issues in your estimates, so I'm going to give you a two-part question. We really need to drill down, and Canadians need to understand what's in the estimates for them.
Sir, could you speak to how these investments overall are going to improve the readiness of the Canadian Armed Forces?
As well, can you also speak to how our role has now changed in Afghanistan. The combat role is over and we're about to conclude the training mission shortly.
Can you also speak to how the current fiscal climate is informing the decisions of our government?
:
Again, these estimates, as you'll see when you're studying them, will show a breakdown of the different components that are a priority for the armed forces. Some of them are expected, but they all contribute to making sure that Canada is ready and able to undertake the tasks that are given to it.
I mentioned briefly our role in the Philippines, and to be able to move that quickly underlines the improvement in the capabilities and the readiness of our armed forces. Literally within hours our teams were being assembled, and they were on their way to help in that particular disaster.
When you go over the breakdown of what we're looking for in these estimates, you will see things such as maintenance and repairs for Cormorant readiness, Chinook readiness, maintenance and repairs for land readiness, maritime readiness, the joint support team. That's to make sure we have the men and women, the equipment, and the ability to get there. Nobody wants to go back to the days when there was a problem somewhere in the world and we had to hitch a ride with somebody. Nobody wants to do that.
When I was at our base in Trenton a couple of weeks ago, to see that C-17 aircraft ready and the people who are willing and ready to support the people of the Philippines.... I think it fills all of us with a great sense of pride and a certain amount of satisfaction that we can be there to do that.
When you go through these estimates and you see the breakdown of the money, again, you will see that much of it is directed towards making sure we are able to maintain that capability, so we don't go back to the days when we're not ready or that we're asking favours of our friends.
Going back to the overall question, Mr. Chair, these are reasonable estimates. I know they're looked at very carefully between the Department of National Defence and the members of our armed forces, to see that these are the funds that we need to continue that. I think they're very reasonable and very supportable.
:
Yes. Again, making sure that we have the equipment to support our men and women is absolutely vital, and you've made a very good point.
We have had a number of successes in the procurement area. I mentioned the C-17s, the Hercules aircraft, light armoured vehicle upgrades, medium to heavy-lift helicopters—those are what we have successfully delivered to the armed forces.
Going back to my meeting in Halifax this past weekend, we were right next door to the shipyards that are undertaking the shipbuilding program on the east coast, and there is one, of course, on the west coast. All of these are contributing to that readiness that you talked about that, quite frankly, was absent a number of years ago.
Yes, we have to continuously look at these and try to move forward, to make sure the men and women in our armed forces have the equipment they need.
Again, there are challenges. Procurement is a big file, needless to say. We've had these challenges, but there have been successes. I mentioned a number of those successes. Again, the reports I get back with respect to the shipbuilding programs on both coasts of this country are underlying that concern for capability for our men and women who serve our armed forces. This is what we have to have, and we have to continue in that vein.
I want to also add my words of welcome to the new minister in his portfolio and to reinforce the previous comments of the importance of the department and our Canadian Armed Forces to the collective security and defence of our country and our playing our part abroad.
One of the challenges the minister has, of course, is that the Canada First defence strategy talks about stable and increasing funding as being foundational to the whole strategy, and he is dealing with budget reductions and budget cuts, contrary to the foundation of that strategy. Trying to understand how that may be impacting some of the goals....
I'm looking at the funding that's being requested of $400 million to support the ongoing implementation of the Canada First defence strategy, talking about equipment. The question I have has to do with the closed combat vehicle project. It was announced four and a half years ago in 2009. The minister of the day said we owe it to Canadian soldiers to give them the protective equipment they need to do the job we've asked them to do.
Two billion dollars was budgeted for the 108 CCVs. They were intended to be arriving in 2012, and of course that's not the case. Currently there is uncertainty about this project.
Can the minister confirm whether that project is a go or not?
:
Thank you very much, Mr. Norlock.
As I indicated to you, I was in meetings in Halifax. I wasn't at the shipyards, but just within a couple of thousand feet of where the meetings were taking place, the infrastructure is actively being put into place to produce these Arctic offshore patrol ships. As you will see in the estimates, there's a request for $168 million that is related to the infrastructure to support this. You have to have considerable infrastructure.
You raised a very important point. These are being made in Canada, and, again, one of the things I would emphasize is that it's not just the jobs that are created right there at the shipyard; it's all the jobs that are associated with that—with the suppliers and indeed the other Canadian companies. This has an effect beyond just the contracts that are let to these companies.
That being said, these are important for what we need to do to maintain our ability for search and rescue, for emergency operations, and I think you even used the word “sovereignty”. We've got to have a strong presence in Canada's north; this is part of our northern strategy, as you know. The Prime Minister is there every year to support the people of Canada's north and to underline its importance to this country. Again, joining him for a short time this summer, I was very impressed to see the Canadian Rangers and others who are involved with this.
But they have to have the right equipment. Again, it was impressive for me to see a Canadian Coast Guard ship off the coast of King William Island. I think this is the kind of thing we have to do. This is an important part of Canada; we're very fortunate that this is part of this great land of ours. Again, not just for today but for the future as well, we have to invest in our capability, so that when questions arise, when there is an environmental issue, if there are sovereignty questions, where there are search and rescue requirements, or where there's an emergency anywhere in the north, we have to have the ability to respond and to respond very quickly. We have an outstanding record throughout the world of responding and helping people who find themselves in a crisis or an emergency situation, but we have to have that capability and we have to make sure that is available right here in Canada.
Yes, when you talk to me about the arctic/offshore patrol ships, I am very, very supportive of that. We have to have that capability; that's a part of what we have to have. We have to have icebreakers, and, as you are aware, those are part of the contracts on the west coast of this country. That being said, it's all part of a strategy to increase the capability and increase our ability to respond to the challenges we have today, and indeed the challenges we anticipate for the future.
The definition phase is to prepare in all respects the build for the ships. It's not just the design; it's testing the facilities, ensuring the procedures and processes are in place. It's an international best practice: to actually control costs in shipbuilding you do not start construction until you're fully ready.
Historically, we would have run a competition, selected a supplier, and then started the process of preparing to build, and we would likely have incurred cost overruns and potentially scheduled delays. In this particular case, the shipyard itself is literally being built anew on both coasts. In the case of Halifax, it's a brand-new world class facility that's rising. In the next 18 months they will continue to finalize the design. It's a very, very detailed construction design. We will actually build test modules in the facility, so there'll be a couple of components of the first ship that will be fully assembled and tested. We will look at acquiring long lead items, so material that would cause delays.
We're literally spending a couple of years to be fully ready to build these ships, which will also basically save us money in production. That was my point previously. Although we've incurred some costs for delays, we're actually also achieving some cost savings by being more efficient, by being fully ready, by having a completely capable shipyard ready to move, by having a design that has been completely tested, right down to having a 3-D model where we can do walk-throughs and test all of the availability and all the maintenance.
This is delivering a best-practice approach, a fully capable yard, a fully capable design, such that when we actually launch the construction we'll have a very good understanding of price, we'll know exactly what we're getting, and we'll be able to build through the arctic/offshore patrol ships and acquire both a capable facility and the people to then move through that and into the next generation of combatants.
:
Thank you, Mr. Chairman.
Mr. Lindsey referred to a part of what the lapses were allocated for, and we're on the topic of helicopters, so we're going to hone in on that for a minute.
The EH101...we all know the Liberals campaigned to cancel that procurement. The EH101 actually had three variations. There was the search and rescue, which Mr. Harris is alluding to, which was never ordered, and now we have the Cyclones, and instead of cannibalizing those for parts, we have just heard that other helicopters have been purchased so that we can keep them up in the air to do the wonderful work that our search and rescue techs do. The second was for medium and heavy lift. We have since obtained the Chinooks that are taking care of that tasking.
Still outstanding are the Sea King replacements, and we know that back when the Liberals were in charge, they purchased a replacement, the Cyclone, of which we have not yet taken delivery, to my understanding. So when Mr. Lindsey indicated that part of the lapse was due to equipment that was not delivered, I would assume that perhaps some of that would be the Cyclones.
Would he please tell me, cumulatively, over the years, the total amount that has lapsed as a consequence of non-delivery of the Cyclones? We'll start with that.
I think Canadians want our armed forces to have the equipment they need, and what they really want from the government is competence and transparency. The challenges are enormous at a time of budget cuts.
It turns out that in 2009 the national shipbuilding procurement strategy estimated that 100 million labour hours would be necessary for the defence strategy of naval ships, but only 70 million person-hours would be affordable. Even at that time, in 2009...and since then the budgets have been cut.
My question relates to how risks are reflected in the budget here. There are two aspects to that. One, because of the lack of competition in the shipbuilding industry under the NSPS, several risks were identified for scheduled delays, unaffordable costs, and technical risks. According to the Auditor General's report, there are not adequate measures in place to be overseeing and monitoring these risks, and there's inadequate monitoring of these risks themselves. My question is, has that increase in work to have proper measures and monitoring shown up in the budget, and if so, where, and how much?
I have a second question, too.
The second risk question I have is this.
There is a risk, obviously, of project cancellations, delays, or reduction in scope. Under the initial RFP, those risks were assumed by private enterprise. Since then, that has been renegotiated, and there has been a transfer of risk of a half a billion dollars from the private sector to the taxpayers. This was raised by the Auditor General. He commented that there was inadequate clarity to avoid that kind of extra assumption of risk by government.
First, is the risk perceived to be higher than it was when the RFPs were being negotiated due to budget cuts?
Second, why would the government voluntarily assume a half a billion dollars of risk that the proponents had already assumed in their bids?
Third, are there contingent liabilities in the books for this potential half billion dollar cost to the taxpayer?