EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, May 16, 1996

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[English]

The Chair: I call the meeting to order.

I'd like to begin by welcoming the Hon. David Collenette, Minister of National Defence; the deputy minister, Madame Fréchette; and Admiral Murray. If you have any other officials,Mr. Minister, you might like to introduce them.

Hon. David Collenette (Minister of National Defence and Veterans Affairs): Madam Chair, perhaps we can introduce them on an as-needed basis. We have the full range of officials.

The Chair: I noticed.

Mr. Collenette: Every question will be answered in the normal thorough way.

The Chair: We do have a vote at 5:30, Mr. Minister. I merely remind you of that.

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Mr. Collenette: One has to decide upon priorities.

Madam Chair, I do appreciate the opportunity to meet with you to discuss the 1996-97 estimates and the 1996 departmental outlook.

The new expenditure management system reflects the government's ongoing commitment to consult Parliament on the activities of National Defence and other departments. I hope the information provided in part III of the estimates and the outlook will assist you in examining and reporting to the House of Commons on all matters related to the mandate, operations and administration of our department.

Unlike last year, I'm here to discuss both of the documents at once, and I would be pleased to answer any questions you may have. Before I do that, I would like to make some general remarks.

[Translation]

It has now been a year and a half since the government released its 1994 White Paper on defence.

I'd like to acknowledge once again the important role that the Special Joint Committee on Canada's defence policy played in helping shape the new policy. Above all, members of the committee did an outstanding job in ensuring that the Canadian people had ample opportunity to express their views on defence issues.

Without a doubt, the policy set out in the White Paper has proven to be the right one for Canada. In an unstable and unpredictable security environment, multi-purpose, combat-capable forces remain essential to carry out national and international roles.

[English]

We have continued to implement important aspects of the white paper, and as promised, we have negotiated and renewed a revised NORAD agreement, one that takes account of our post-Cold War defence needs.

We have delivered on our commitment to conduct a path-breaking study on improving the UN's rapid reaction capability.

We also kept our promise to recognize the serious humanitarian problem posed by anti-personnel landmines. Earlier this year I announced a unilateral moratorium on the operational use of these mines by the Canadian forces. Canada continues to support a moratorium on the production and export of anti-personnel landmines as well as a global ban on their use.

Madam Chair, I want to emphasize that Canada is in the forefront of advocating a global ban on the use of these anti-personnel landmines. I understand that Canada's lead has been noted by some of our allies. Other countries certainly will be making statements on this issue in due course, perhaps reasonably soon.

Operationally, the forces have had a busy year in promoting the prospects for peace abroad and the security of Canadians at home.

[Translation]

I had the opportunity last week to visit the Canadian contingent serving in Haiti. They continue to do a remarkable job. As you may know, most of our personnel in Haiti are French speaking, and this has allowed them to establish a close bond with the local population and accomplish more than what other, larger contingents might have achieved.

My trip to Haiti reminded me once again of the excellent work that Canadian Forces personnel are performing in peace operations throughout the world, including in Bosnia with the NATO-led Peace Implementation Force, as well in Cambodia and the Middle East.

[English]

Of course, the dedication and professionalism of the forces continue to be in evidence closer to home. The fine work of our search-and-rescue personnel, who have carried out a number of daring rescues over the last year in remote regions of the country, is but one example.

This coming year will bring new challenges. Notwithstanding our steadfast support for the UN, the fact is that the organization remains in a state of political and financial crisis. The international community will continue to have to deal with the challenge of building peace, democracy and prosperity in both Haiti and the Balkans. Finally, a number of developments over the coming year, from elections in Russia and the United States to the possibility of more challenges in Africa, will confront us with new situations to which we must respond and adapt.

There's another ongoing challenge, Madam Chair, that we must face - that of diminishing resources. The white paper made it clear that our forces have to be managed more efficiently in the future. The government's ongoing effort to reduce the national budget deficit means that National Defence needs to spend every defence dollar as wisely as possible.

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National Defence has of course been a major contributor to the government's deficit reduction effort. As the outlook document points out, the 1994 and 1995 budgets alone removed $9.8 billion from DND's planned expenditures over the period 1998 to 1999.

The 1996 federal budget will further reduce annual defence spending by $200 million in fiscal year 1997-98, and this reduction will increase to $450 million in 1998-99. In addition, there will be a one-time budget reduction of $150 million in 1998-99. Projected defence spending for 1998-99 will be $9.25 billion, a 23% drop in actual spending from the 1993-94 fiscal year, or a 30% drop when inflation is factored in.

[Translation]

These fiscal pressures, in addition to changes in Canadian society and the strategic environment, have confronted DND and the Forces with a major challenge.

And to complicate matters, we have recently been at the center of considerable controversy. But I can assure you that, despite continuing challenges posed by the Somalia affair, the Department remains a vital and vibrant institution.

In fact, DND and the Canadian Forces are becoming more dynamic and more innovative than ever.

[English]

Our defence organization is in a period of massive change and renewal. The old ways of doing things no longer suffice. Fundamental changes are being made in the way the department and the Canadian forces conduct their business. Their very culture is being transformed. Together we're asking tough questions about what we do and how we do it.

It means setting priorities that reflect the mission of the Canadian forces to protect the interests and values of Canadians at home and abroad. Over the last few years we've launched a series of initiatives that are helping us to dramatically reduce expenditures. At the same time, we're preserving those operational capabilities that are essential to maintaining multi-purpose combat capable forces.

Expenditures on infrastructure, overhead and support activities, command and control, and headquarters and administration are being reduced on an ongoing basis, and new management practices that improve effectiveness and efficiency are being introduced.

[Translation]

All of these initiatives are part of a wide ranging program to improve efficiency across the Department and ensure that the Canadian Forces can do their job well.

Change is not an easy process, as anyone in our defence organization will tell you. Its impact on day-to-day activities and morale of personnel must be carefully and constantly monitored. But we are moving forward in the knowledge that change is no longer an option - it is a necessity.

[English]

I'd like to turn your attention to some of the specific changes in this year's estimates and give a little more detail. In fiscal 1996-97, defence spending will decline to $10.5 billion, a reduction of $525 million from last year's estimates.

Within the level of funding, defence will continue to implement policy initiatives identified in the 1994 white paper. Emphasis will be placed on further reducing infrastructure and overhead costs, sustaining multilateral peace operations throughout the world, and re-equipping the Canadian forces.

Personnel levels for 1996-97 will continue to decline. At the beginning of this fiscal year, our regular force strength dropped from 74,900 in 1994 to 66,782, a reduction of over 8,000 military personnel. Over the same period the civilian workforce decreased from 32,500 to 24,500, again a reduction of personnel of 8,000. We are on target to achieve our goal of 60,000 regular force and 20,000 civilian personnel before the end of the decade.

[Translation]

In terms of our capital program, we have made progress in carrying out major capital purchases identified in the White Paper. For example, during the last year we have announced the first phase in the procurement of Armoured Personnel Carriers for the army and we are also proceeding with a project to acquire a new fleet of search and rescue helicopters. We will now be turning our attention to the purchase of maritime helicopters, which remain a key component of our re-equipment program.

[English]

In fiscal year 1996-97 we plan to devote almost $2.5 billion to capital expenditures. In the navy, the last of the 12 Canadian patrol frigates will be delivered in September of 1996. And we have recently started delivery of the 12 maritime coastal patrol vessels.

In addition to the APCs, the army is receiving the Lynx replacement vehicle, and in the near future new heavy dump trucks to replace some of vintage 1957-58, as I found out to my horror at Gagetown a couple of weeks ago.

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Projects to acquire new night vision goggles for search and rescue technicians, advanced land fire control systems, and weapon simulation equipment will also get under way this year.

In the air force, we're about one-third of the way through delivery of 100 utility tactical transport helicopters. We also recently replaced two Hercules aircraft to sustain our capability to support our troops around the world and carry out humanitarian and relief efforts whenever they are needed. Members will remember that we lost a couple of those aircraft in recent years, so it was very crucial that we replace them. We got a good deal from the manufacturer on their stretch version of the C-130, and I think that will help with our air lift capability.

[Translation]

These are just a few examples of the over 90 major capital projects for equipment set out in part III of the Estimates.

At the same time, we will need to examine ways of reducing our planned capital expenditures in the future. About two-thirds of the reductions laid out in Budget 1996 will come from the capital program. This will involve delays, re-profiling or cancellation of a number of capital projects. A detailed analysis of the impact of the changes to the capital program is underway.

[English]

However, the department and the forces are determined not to repeat the experience of the early 1970s, when funding reductions led to a rust-out. That was something that we really should avoid in future.

Under budget '96, the capital program will represent 20% of the defence expenditures by the end of the decade. This level of funding should allow us to meet the most important equipment needs of the Canadian forces.

Over the longer term, the department will have to address the need to return a higher level of capital spending in order to prevent rust-out. Infrastructure, overhead, and support functions will continue to be reduced in the year ahead. Implementation of budgets '94, '95 and '96 will result in the reduction, consolidation, or closure of about 40 Canadian forces bases, stations, and other facilities. Recent closures include Canadian Forces Base Chatham and Cornwallis, stations at Shelburne and Carp, and detachments at Penhold and Nanaimo. This year we're closing, among others, CFB Moncton and Toronto, CF station Mill Cove and Aldegrove, and the CF detachment in London.

We expect to finalize our current program of major infrastructure changes, as described in part III of the estimates, by the end of 1999.

[Translation]

The pace of renewal has picked up within DND and the Forces over the past year and we expect this to continue.

As part of our Management, Command and Control Re-engineering process, we have unveiled plans for a leaner and more efficient headquarters structure.

The Command and Control structure will be simplified. Indeed, we have begun to wind down Air Command, Maritime Command and Land Force Command headquarters to create a single strategic-level National Defence headquarters by mid-1997. We are also in the process of streamlining management levels within NDHQ - for example, one layer of management is being eliminated.

[English]

Last year, we indicated that we would reduce by 1999 the resources devoted to headquarters functions by at least one-third. We're well on our way to achieving that goal. For example, we've already reduced the number of military and civilian personnel working at headquarters from 14,000 in 1994 to 11,000 at the start of this fiscal year, a reduction of almost 21% in just over two years. Within this context, we will continue to reduce the number of senior military and civilian officers in the defence organization. The number of general officers has been cut from 125 in 1991 to 79 by the end of this current fiscal year, and it will drop to about 70 in 1998 - and I do not rule out further reductions, as we go through this process.

On the civilian side, the number of executives is already nearly 50% less today than it was in 1991.

Madam Chair, that is an enviable record, even in the private sector. I think people should pay attention to the real changes we're making in the restructuring, the re-engineering of the department in this climate of fiscal restraint. And they should pay attention to that, as well as pay attention to some of the more visible problems we have.

We're attempting to stretch the goal of reducing one-third of headquarter's resources to 50%. This aim, of course, is to divert as many resources as possible to our operations.

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The department continues to move ahead with new and more efficient management practices. In July of this year we officially launched our alternative service delivery program, which encourages managers to continue their efforts at finding the most efficient and cost-effective method of providing services that are not directly linked to operational capability.

We've launched a number of pilot projects in this area in recent years with great success. At CFB Portage la Prairie, Canadair is providing most of the flight training and all of the base support on a contract. The quality of training is as good as ever, but it has been achieved at a considerably lower cost than we were able to deliver it for at National Defence.

At the militia training and support centre in Meaford, Ontario, private industry has taken over virtually all of the support services. Initial estimates suggest that we'll save $7 million over five years from this particular venture.

Last month the Canadian Forces housing agency began operations and eventually will take over the management of married quarters at defence establishments across the country. The goal here, Madam Chair, is to save money and improve service to resident families.

We're going to continue to build on these early initiatives, and we have an additional list that will be tested over the next 18 months, including base support, food services, ship repair, aircraft maintenance, support and medical services.

Madam Chair, I have total support for this program in the senior management in the forces and at National Defence. Naturally, there will be some resistance further down in the system as people see this as a threat to their livelihood, but in the long run it's the most efficient way to preserve jobs in communities across the country and give us the flexibility to contribute to deficit reduction.

[Translation]

Within the context of restructuring, we are also making progress in our efforts to increase the operational and cost effectiveness of the Reserves. As I indicated to you last week, my officials and I are ready to move ahead with the vast majority of the recommendations of the Special Commission on the Restructuring of the Reserves, as well as those of SCONDVA and the Senate Sub-Committee on Veterans' Affairs.

We expect to begin full implementation of all accepted recommendations by the end of the summer. The paid ceiling of the Primary Reserves will be increased from the planned reduction figure of 23,000 to a level which could, with increased efficiencies, allow for an actual Primary Reserve strength of around 30,000.

[English]

In addition, we have the supplementary ready reserve that I talked about last week, to try to get another 20,000 people into the system to augment the primary reserve. Madam Chair, last night I slipped off to Calgary and met with the representatives of all of the Alberta regiments that could attend - it was most of them. This proposal that we put forward, based on the commission's recommendations and the work of this committee, was heartily endorsed by all of those people representing the regiments in Alberta. I understand that Reserves 2000, which is the composite group that has articulated the concerns of the reserve movement, has written to me - I haven't seen the letter yet - endorsing the general thrust of the proposals and stating their willingness to work with the department and the forces to restructure the reserve over the coming 12 months.

Madam Chair, we're almost there in terms of discharging our white paper commitment to add 3,000 people to the sharp end of the army to deal with the problem of overdeployment and stress on some of our individuals. We're about halfway there. We'll have that complete by next summer.

You'll also note that the estimates for Emergency Preparedness Canada have now been fully incorporated into DND, and of course as minister I'm responsible for that. So we're making solid progress and I think that if the kind of message that I gave you today was broadcast across the country, it would measure up very favourably against some of the negative and isolated stories that we get from time to time that cast aspersions upon the efficiency and dedication of the men and women in the armed forces and the Department of National Defence.

[Translation]

Thank you, Madam Chair.

[English]

The Chair: Thank you, Mr. Minister. I know that you're prepared to entertain questions. We have a special way of doing that in this committee. At each meeting we start with a different party. Today we will start with the Reform Party. I would ask Mr. Frazer to pose his questions.

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Mr. Frazer (Saanich - Gulf Islands): Thank you, Madam Chairperson.

Mr. Minister, I listened very carefully to the encapsulation of the spending cuts that defence has taken over the last few years and are projected into the future. Defence has been a rather popular target for spending reductions by the government. A lot of Canadians believe that with the lack of threat that Canada now faces, defence can be reduced substantially more. On the other hand, as with the police force, when you want them, you want them right now. You and I both know that it takes considerable time to establish the expertise and the capability.

Do you have any assurance for the committee that these reductions we're seeing are the end of the cuts to defence? Is it going to get off the head of the list when it comes to reducing our budget?

Mr. Collenette: Mr. Frazer, it's very difficult to give that guarantee. It's part of a larger picture in terms of deficit reduction. As my officials know, I fought the good fight this year and managed to make some gains. The reductions were not as anticipated by earlier planning, because I made the point that you made and the committee made in its study - that there is a point beyond which you can not go and still have the operational capability to be there to defend Canada's interests and sovereignty.

I make these arguments constantly and I think they are being more widely appreciated by others in government, including some of my own colleagues, who don't know as much about defence as you and the committee members do. I think they are beginning to appreciate the fact that we're pretty close to the limit in terms of defence reductions. It doesn't rule out further cuts, but the big hits we took in 1994-95 have gone a long way to dealing with the defence commitment with respect to contribution to the deficit.

Mr. Frazer: As you are aware, you've already exceeded the minimum recommendations in terms of personnel made by the special joint committee on Canada's defence policy. I'm not sure this wasn't a mistake, but it's now in the books. I think it would be a terrible mistake to exceed these cuts. To me, 60,000 is too few.

I know personnel costs are the major expense of the defence department. Do you think the downsizing on rank, both in the civilian corporation and the military corporation, will effect a reduction in the personnel costs the department is currently facing?

Mr. Collenette: A reduction of the personnel costs themselves?

Mr. Frazer: Yes. As you point out in here, we got rid of a number of generals and we're downsizing all through the ranks. I hope that's going right down to the bottom of the commissioned ranks at least. Will that make any major difference in defence expenditures?

Mr. Collenette: Yes. We had to go to 60,000 because we had a tougher target to meet in 1995. I'm with you and the committee. In a perfect world we would have kept it at 66,700 or somewhere around there, but we had to make some tough choices. Do we keep 66,700 and then cut back on capital spending and equipment? Do you have the troops, the strength, but have even less in the way of new equipment? We had to make these trade-offs. Certainly we're looking at all our costs - personnel costs and other costs - to meet our targets.

Mr. Frazer: I'd like to go to the ``s'' word that you mentioned the other night - the submarine deal. The apparent forfeiture of our opportunity to buy the Upholders leaves us in a situation now where... I understand that a refit for our old boats was put on hold during the negotiations. Presumably that will recommence now. Can you give us any idea of what that will cost? Can you give us some idea of what loss of capability we're experiencing with those boats as they age?

.1600

Mr. Collenette: Perhaps I should let Admiral Murray answer the question.

As I said this week when Mr. Portillo was here, the submarine deal door is still open as far as we're concerned, but we're not going to proceed at this time. There will come a time when we will have to commit on refits for the Oberons. I believe one has already been done. They come in at around $40 million apiece. If we have to go ahead with the other one, obviously that would affect any financial arrangement we would make to justify the acquisition of Upholders. So I can't give you a precise date as to whether or not there's a point beyond which we will have to go before we are undermining the viability of that particular deal.

Admiral Murray can talk about the seaworthiness of the Oberons. I think they're due to keep going for another few years.

Vice-Admiral L.E. Murray (Vice-Chief of Defence Staff): Yes, the first one has been refitted. The second refit is due to commence shortly, and the third one will start after the second. That will carry those three boats through until just after the turn of the century. Although the hulls are quite old - about 35 years, I think - in these refits they are made absolutely safe to operate. There are no safety concerns.

In terms of operational capability, they were fitted with Mk 48 torpedoes a few years ago, and have towed-array sonars and an upgraded fire-control system. They're still a capable submarine, despite their age and obsolescence. The current three will carry us through until just beyond the turn of the century, when another major decision would have to be made about investment in further refits. As the minister says, the cost for each refit is about $40 million to $50 million.

Mr. Frazer: Are you saying, Admiral, that there is no reduction in the capability of these boats as compared to when they were new?

VAdm Murray: In terms of operational capability, they have more capable torpedoes -

Mr. Frazer: I meant with regard to depth and this type of thing.

VAdm Murray: I believe there has been some modest reduction in their depth capability over the years, but they're relatively simple machines, and if one is prepared to continue refitting the hulls and the engines... We have made strides in the dockyard in Halifax in terms of how to do the refits as effectively as possible. By splitting the hulls in two, one can maintain their seagoing capability at about the original level. I think there has been a modest reduction in the diving capability, but it's still not an insignificant depth they dive to.

Mr. Frazer: Mr. Minister, in your consideration of this deal, was any thought given to the outstanding $340 million in Second World War money between Britain and Canada that is still on our books? Did we work that into the equation on the purchase?

Mr. Collenette: I know there was some discussion about using old war debt, but I'm not familiar with all the figures. That is up to Foreign Affairs to negotiate. We prefer to negotiate with things that we control rather than going to some of our colleagues in government. That particular component was not part of any agreement we were planning to put forward.

Mr. Frazer: Was it incorporated in the use of bases and the rest of it to make a package that would be substantially less -

Mr. Collenette: I don't want to go into all of the details because we haven't made any decision and it's somewhat fluid. We were trying to do it in the best way possible to avoid cost, to avoid the refits on the Oberons among other things, so that the actual cash outlay would be kept to a minimum. Since we are not ready to announce it, it would be premature to give any further details.

Mr. Frazer: Mr. Minister, I want to thank you for the comprehensive briefing I asked for and which was given last week on the department's approach to Gulf War syndrome, which we hear a lot about in the papers. Are you prepared to continue providing all of the support necessary to people who are suffering from what they perceive to be Gulf War syndrome? I understand there's some difficulty in analysing what is and what isn't Gulf War syndrome, and I'm even told that the word ``syndrome'' is not the right one to use.

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There are people who are experiencing difficulties that they perceive to be as a result of their employment in Africa. We are of course obligated to them. They basically laid their lives on the line for us, and I think Canada is obligated to provide them with all the support possible. Am I assured that this is going to be the case?

Mr. Collenette: As you know, National Defence has done a number of things to help with these very sad cases that come in at the National Defence medical centre, with the 800 line and compiling the data. But pension entitlement really falls to Veterans Affairs, so I wear two hats.

What you said is absolutely correct. A lot of people have come in with medically recognized illnesses. Others have come in with things that aren't really explicable and they use the term ``Gulf War syndrome''. There are wide-ranging symptoms touching upon almost all of the body systems. They include fatigue; weakness; lack of energy; general bone, joint and muscle pain; skin rashes; gastrointestinal disturbances; mood changes; irritability; memory loss; difficulty in concentration; depression; lack of motivation; sleep disturbance; shortness of breath; coughing and choking - all of those things.

There have been lots of studies. The U.S. has been in the forefront of this, and we've had our own expert working on it. No specific agent has been identified to cause this. There are a lot of suspects: the toxic chemicals from fumes of burning wells, parasitic illnesses, insect bites, microwave radiation, vaccinations in anticipation of biological warfare, pesticides, paints used to resist chemical agents, and above all, a drug called pyridostigmine, which is used for pretreating individuals in anticipation of chemical warfare, nerve gas.

I'm going to go on at a little length, Madam Chair, because this is a very important subject. I'm glad Mr. Frazer raised it. I know he's had great concern about this, as have all members of the House.

As of March this year, Veterans Affairs has had 84 applications from Canadian Gulf War veterans for disabilities of any kind. Of these, 39 received favourable entitlement, 16 unfavourable, and 29 were awaiting decision.

You're right that Veterans Affairs has to determine two things in deciding whether a disability pension application should be granted: first, that there is a disability, and second, that it exists as a result of service. If Gulf War veterans feel they have Gulf War syndrome, they are counselled to apply for any of the service-related illnesses that are medically recognized, such as chronic fatigue, post-traumatic stress disorder, chronic bronchitis and the others that I mentioned a little earlier.

But there is some confusion out there and I want to allay it. The impression is given that Canada is not attending to these veterans. There is no such recognizable illness as Gulf War syndrome, but anything a veteran categorizes as Gulf War syndrome, such as the things I mentioned earlier, will be recognized for benefit. Any specific illness identified by the veterans themselves as Gulf War syndrome will be adjudicated for pension. Almost any illness or disability like the ones I've mentioned will be considered for benefit, and the benefit of the doubt is given to the veteran.

On the 16 unfavourable cases I mentioned, I spoke with the deputy minister at Veterans Affairs in Charlottetown at 3 p.m., just after Question Period. I asked him to immediately review these, because I'm not satisfied that all of the people understand the methodology in getting the entitlement. There should be no reason why anybody coming out of the Gulf War who has any of these kinds of symptoms, who has a disability that is causing stress, should not be eligible for pension entitlement. I want to make sure we keep on this and get those people adjudicated as quickly as possible.

I hope that helps to clarify the situation somewhat.

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Mr. Frazer: What I was looking for, Mr. Minister, was your assurance that people, whether they're in the service now or retired, who experience these difficulties will have the door open at National Defence, be it through DVA or through the department itself, and that they will be received with an open mind and dealt with promptly.

Mr. Collenette: Absolutely. We are not giving entitlements to people from the Second World War, because as those people age, and they're now in their 70s, new complaints crop up. Somebody may have been fine for 35 or 40 years, but now new complaints are cropping up. Canada does not turn its back, has not turned its back, and will not, under any government - we haven't done it under Liberal or Conservative governments since the war - turn its back on any veteran in need of sympathetic treatment and consideration for benefits.

The Chair: Thank you, Minister.

Mr. Frazer, you can try round two. You had more than your time, as I think you know.

Mr. Frazer: The minister took it all.

The Chair: Those are the hazards. What can I say?

Mr. Bertrand.

Mr. Bertrand (Pontiac - Gatineau - Labelle): Mr. Minister, during the House debate on Haiti in February, you mentioned that the final costs were not yet available for Canada's participation in IFOR. Table 101, page 211, of the estimates lists all the costs to the department of peacekeeping and related operations; however, it does not include the assessment to the Canadian forces for NATO's common costs. These are the costs that we will have to pay regardless of the size of the contingent we contributed to the implementation force. Do you now, Mr. Minister, have these figures for the total costs of IFOR?

Mr. Collenette: Yes, and what I might want to do, Madam Chair, instead of going through a long answer, is give you some quick highlights and perhaps a written response, which you can include in the Minutes of Proceedings.

Originally we talked about the total costs being in the order of between $49 million and$70 million. I think in that debate I said up to $70 million. One has to understand that this is the first time that NATO has mounted an operation and we were therefore treading new ground on the costs side, as well as on the operational command and control side. In other words, it was the first time we were putting into practice the plans that were developed over 40 or 50 years in the Cold War. What's happened is that the costs have escalated. I'm not happy about it at all, but I'm assured by our officials that they have really worked with NATO to ensure that we are being dealt with fairly.

There are what we call common costs. These are costs that are centrally funded by NATO because they benefit IFOR as a whole and can't be attributed to a single nation. Canada obviously has to contribute its share to common costs, and that contribution is now $45 million. The incremental costs - and those are the costs that are over and above the amount that would have been spent for Canadian troops and equipment had they not been sent to Bosnia under IFOR - are now $53 million.

So we've gone from initial estimates of around $50 million to $70 million to close to$100 million. That's a pretty astronomical leap, and it's something that has given us concern.

I think the cost is certainly well worth it, given the security that has gone to that part of the world. We're working with our colleagues to ensure that the costing is precise and that Canada doesn't pay any more than it should pay, but it's certainly a lot higher than what I originally said it was on 6 December, when we talked about all these figures.

Mr. Bertrand: That's all I had for now.

The Chair: I'm wondering whether, given this 10-minute round, Mr. O'Reilly would like to share this round.

Mr. Frazer: Can I have one more round?

The Chair: No, not yet, Mr. Frazer. I promise you'll get -

Mr. Frazer: I just want to pick up on something he said.

The Chair: You had 16 minutes, and we'll give you time again.

Mr. O'Reilly (Victoria - Haliburton): Welcome, Mr. Minister.

I'm not sure that I should be asking this question when the member from Edmonton East is sitting beside me, but I'll try to go through it.

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Minister, there have been some disturbing reports in the media about the eventual cost of establishing the new army superbase in Edmonton. The department, I believe, has issued estimates of up to $300 million, which include the cost of transferring personnel to Edmonton and construction at CFB Edmonton. However, the current president of the Alberta United Services Institute, a former armed forces engineer, was quoted in the Calgary newspapers as saying the real cost to build a base is much closer to $1.4 billion.

I have a four-part question, Mr. Minister: (1) What is the total cost of the consolidation?(2) What savings did DND expect from this exercise? (3) Why was it necessary to consolidate it?(4) Why was Edmonton chosen as the site for the consolidated army base?

Mr. Collenette: Edmonton was chosen because it was close to Wainwright. It was also an excellent facility, a former airbase with a SAC runway, which has provided good space for parking and the construction and equipment that can go on there. It has the required room for expansion, as most airfields do. It's outside the city of Edmonton; it's to the north of Edmonton. It is much more suited to a mega-base than Calgary is.

In Calgary we had a problem with the Sarcee Nation claims on part of the base, which would have to be adjudicated. Also, I think it was the Currie Barracks that were in the middle of a subdivision in the city. There was just no room. That's not really the best place to have an operational base with heavy equipment.

Chilliwack is a lovely base with a great facility. I'm sorry we have to close it, but the fact is that it just didn't make sense to continue it.

We're consolidating everything in Edmonton for the reasons I've given. The space was there, and some infrastructure was there and a lot more could be built.

One of the reasons we're closing Calgary, which some of these critics who pop up in the media forget about, is that there's a cost avoidance factor we have to add to all these figures. At Calgary there was $131 million dollars worth of reconstruction on the books. That would have had to have been spent if we had stayed in Calgary, so you have to factor it into your savings. The combined savings and the residual savings, or the net, after you take in the offsets of the construction at Calgary and you take into account Chilliwack...it's costing us $156.9 million to move to Edmonton.

You say that's a lot of money. It is a lot of money, but the total annual savings are $72 million and the pay-back period is about two years. So within two years - I believe, Admiral Murray, you're the expert on this - we start to recoup this $72 million. It doesn't take a rocket scientist to understand that over 10 years that's $720 million.

So there's big money to be saved with this consolidation, and it just made more sense financially and operationally to do it in Edmonton. We're doing what we've done to the rest of the country, moving to mega-bases. We have one at Petawawa, we have one at Valcartier, and we have one at Gagetown.

Mr. O'Reilly: Was this done with consultation strictly through the military? There's nothing political in it?

Mr. Collenette: What do you mean by political?

Mr. O'Reilly: It wasn't a political decision, it was a military decision.

Mr. Collenette: I can tell you that if I had made political decisions, Cornwallis, Chatham, Mill Cove, Shelburne - they'd all be open and we would be drowning in red ink.

Mr. O'Reilly, I think you understand that in 1994 we closed facilities in just about every Liberal constituency in Atlantic Canada.

Mr. O'Reilly: Never mind my -

Mr. Collenette: We reduced you in the next budget, in 1995.

Mr. O'Reilly: It was a backward add-on just to give you an opening, Mr. Minister.

.1620

To close, I want to congratulate you on your answer on the Gulf War syndrome. As you know, some of us Liberals have been chasing you pretty hard on it and the Secretary of State for Veterans Affairs. We're very pleased to hear that the move has been made, that treatment is being offered and that the military has opened up its heart to some of these very deserving veterans. We appreciate that.

Mr. Collenette: There was no problem with the military. Their hearts were open. It was getting the pocketbooks open in DVA.

The Chair: Monsieur Crête.

[Translation]

Mr. Crête (Kamouraska - Rivière-du-Loup): In your statement, you mentioned that you have been at the centre of "considerable controversy" over the past year. I think that characterization is a fairly accurate description. It certainly has been an eventful year for the Canadian Forces and beyond spending, there are surely profound changes that must take place in the attitudes of those in command. I'm thinking particularly of the need for transparency. With that in mind, I'd like to discuss the situation of the Reserves.

You must have realized over the past year that it is not enough to enact good measures but that people must also be made aware of them. The Reserves cost approximately $1 billion a year so it is important that they undergo a close examination. In your statement you refer to recommendations that were made by the Special Commission on the Restructuring of the Reserves and the recommendations of the Standing Committee on National Defence and Veterans' Affairs, majority recommendations subscribed to by both the governing party and the Official Opposition.

I'd like to read for you recommendations 1, 2, 11 and 12. In the first recommendation, the committee recommended that:

1. The recommendations of the Special Commission Report should be implemented as quickly and as effectively as possible, but modified or accompanied by certain actions, as indicated in the following recommendations.

It went on to say in recommendation 2:

2. A clear and accurate costing of what it now costs to maintain the Reserve Force should be undertaken before the implementation of the Special Commission's recommendations.

I now come to two main recommendations which were, as I said, endorsed by the Liberal majority and the Official Opposition.

The committee recommended that:

11. An implementation committee composed of an equal number of commissioners, serving Regular Force officers and Reserve Force officers in conjunction with personnel from the Auditor General's Office...

That's where the matter of transparency comes up.

In your presentation you say that the recommendations of the Standing Committee on National Defence and Veterans' Affairs will be implemented with respect to restructuring. When we met last week, you gave us a summary of the analysis which refers to the Special Commission rather than to the committee report. Do you intend to follow up on recommendation 11 aimed at ensuring that there will be personnel from the Auditor General's Office involved in all stages of the analysis study so that we have a clear view of all the components involved in this area of activity, those which are functioning well and others which are not functioning as well?

In recommendation 12, the committee requests that:

12. The Minister of National Defence should provide a written response to recommendations of the Standing Committee on National Defence and Veterans' Affairs and follow up this report with an appearance before the committee at his convenience.

So the committee makes a distinction between the analysis done relating to the Special Commission's recommendations and the response to the recommendations of the standing committee. Could you tell us what your position is and your response is to this, Minister?

Mr. Collenette: I don't have the report with me but I can tell you that a report was made by the Auditor General two or three years ago on the costs of the reserve. He is well aware of our intentions. I'm sure that the figures and the documents we gave last week were correct. The figures have been checked and we've accepted almost all the recommendations of the Special Commission and most of the committee's recommendations.

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If you require further information on the costs of the Reserves, I am willing to organize a briefing session for you and Mr. Jacob with the Department of defence relating to all these costs. I mentioned last week that a member of our team is travelling throughout the country at the present time to explain the methodology used in determining costs and all the figures. That is the explanation I can give you.

Mr. Crête: Minister, I don't think that we're talking about a briefing session. Let me read recommendation 11 for you again, it is a joint recommendation from the majority and the Official Opposition.

The Committee therefore recommends that:

11. An implementation committee composed of an equal number of commissioners, serving Regular Force officers and Reserve Force officers, in conjunction with personnel from the Auditor General's Office, should be established to conduct the impact analysis study and to monitor the implementation of the Special Commission recommendations and should report on a regular basis to the Standing Committee on National Defence and Veterans' Affairs.

The purpose of this recommendation was to ensure the transparency of the information and to avoid a situation where people are carrying out a study of themselves when the Auditor General has already raised a number of questions relating to the Reserve. Do you intend to follow-up officially on recommendation 11 as well as recommendation 12 asking for a written response to the recommendations of the standing committee and not just a response to the recommendations of the Special Commission?

Mr. Collenette: Mr. Jacob asked me the same question last week and I told him that we did not go along with recommendation 11. It is our wish to set up a working committee from the Regular Forces as well as the Reserve Force to monitor the restructuring.

As for your question about the Auditor General, let me point out that he is always involved. He is the one that watches over the work and decides whether it has been done efficiently. But in answer to your question about the recommendation, we do not accept the recommendation.

Mr. Crête: I gather then that you are going against the recommendation presented by the Liberal majority and the Official Opposition and that you are not willing to have the committee operated in conjunction with personnel from the Auditor General's Office.

Mr. Collenette: Yes. It is not the role of the Auditor General to work in the administration of government. He and his colleagues may examine and monitor the activities of our department but not work and become involved in the implementation of the restructuring. I know that you are concerned but the Auditor takes a great deal of interest in the restructuring and will examine what we are doing and may perhaps report on it next year.

Mr. Crête: I take note of the fact that you have decided not to involve the Auditor General's Office in this matter.

To turn to another subject...

[English]

The Chair: Monsieur Crête, I do think the question has been asked and asked and asked.

[Translation]

Mr. Crête: It's a different matter.

[English]

The Chair: Excuse me, Monsieur Crête, excusez-moi.

[Translation]

Mr. Crête: It's a different subject, madam Chair. You gave 16 minutes to the Reform Party and the Official Opposition is certainly entitled to the same amount.

[English]

The Chair: Thank you, Monsieur Crête. I will again say that this particular question has been asked and asked and answered. You do have time. I am not cutting off your time. I am suggesting to you gently at this point that you move along to another topic.

[Translation]

Mr. Crête: That's exactly what I had started doing, Madam.

[English]

The Chair: Well then, do it.

[Translation]

Mr. Crête: I'd like to talk about the mission in Haiti, the cost of which Canada has agreed to pay rather than the United Nations without any billing process. The four-month period is coming to an end. I was told the amount might be in the neighbourhood of $24 million. What will happen in the subsequent periods? Is there an agreement with the United Nations so the UN will assume the costs? Will Canada be renewing the agreement or will it be withdrawing.

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Mr. Collenette: It's too early to give you an answer, Mr. Crête. I was in Haiti a week ago. I discussed the situation with President Préval clearly indicating the work being done by our forces. I should stress that the presence of francophone members of our forces has enabled us to achieve excellent results. You were right in saying that we have committed a sum of $24 million for four months. Unfortunately, the normal repayment of $16 million will not be effected because of a problem in the UN Security Council.

I'm not sure that Canadian taxpayers are willing to continue to go along with such an arrangement. Mr. Axworthy is now involved in discussions about the future of the mission with his counterparts. I've often visited Haiti both as a politician and in my private life and I think it would be quite sad for us to leave the country after investing in democracy for five years but we do have cost problems because Canada does not have the resources to continue to pay all the costs of this kind of mission.

Mr. Crête: Do you expect that the House will be consulted as was done in the case of other foreign missions before the government came to a decision? In your opinion, when will this decision be taken?

Mr. Collenette: We intend to consult members of Parliament in a debate. The situation must be clarified before the end of June while Parliament is still sitting... I suppose that there will be a debate or consultation.

Mr. Crête: One thousand six hundred anti-tank missiles are to be purchased, the purchase process is already under way. It involves $23,6 million out of a total program expenditure of$230 million. I'd like to know when we've actually made use of anti-tank missiles as part of our army operations. Will these missiles simply be used in training? Has it ever been demonstrated in the past that certain occasions require the use of this type of equipment?

VAdm Murray: These measures are very important in lots of war missions as well as peacekeeping missions. It all depends on the threat. In many of these missions, there are tanks and our soldiers require anti-tank missiles. In most of these missions, there are not any UN tanks. That is why our soldiers often require this kind of missiles.

Mr. Crête: Have these anti-tank missiles been used in the mission in the former Yugoslavia?

Mr. Collenette: Not yet, but the need may possibly arise.

Mr. Crête: When were such missiles last used by the Canadian Armed Forces in a real life situation?

VAdm Murray: I'm not quite certain but it wasn't in the former Yugoslavia. Vehicles of this type are very useful in monitoring terrain during nighttime. For this reason, such vehicles have often proven to be very useful in this mission since 1992.

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Mr. Collenette: Mr. Crête what is the purpose of your question?

Mr. Crête: I want to know whether this purchase is justifiable. It is a large amount. Things cannot be done as an automatic reflex, we must regularly examine the usefulness of our purchases.

VAdm Murray: Without this capacity, it would be difficult for defence staff to recommend to the government that soldiers be sent on such missions. It must have this capacity in situations where tanks would be a threat to our soldiers.

Mr. Collenette: Yes, the essential point is to have forces that are ready for combat. You are acquiring equipment for possible use in a certain situation; normally you do not expect to use such equipment but you must have it for a possible crisis. Canada is not the only country to do this.

[English]

The Chair: Thank you very much, Monsieur Crête.

Mr. Williams, round two, five minutes. I'm going to be slightly more aware of timekeeping.

Mr. Williams (St. Albert): Thank you, Madam Chair. That will mean seven, I hope.

The Chair: You can see how amenable I am.

Mr. Williams: Mr. Minister, we have the procedure and house affairs committee looking at the Jacob affair, where a letter was sent to the forces in the province of Quebec. In anticipation of another referendum, have guidelines been developed by your department to anticipate a situation similar to the letter we had from Mr. Jacob?

Mr. Collenette: Madam Chair, I can't discuss this. This is before another committee.

The Chair: Thank you. Exactly, Mr. Minister. I think the hon. member knows that we're here to discuss estimates. His question is out of order.

Mr. Williams: Okay, Madam Chairman.

I have some documents available to me that came from access to information and therefore are in the public domain. This was a memo by Colonel J.R.P. Daigle in 1994. He says: ``It's hard to rationalize a national headquarters that is 35% larger than a two- or three-ocean navy and only 14% smaller than the entire air force.'' We would have expected to see at least a 20% to 30% reduction in the size of NDHQ. How much reduction has there been in NDHQ these last few years, Mr. Minister?

Mr. Collenette: I'm certainly not going to comment on a memo I have not seen. Given the way access is used at National Defence, I'm sure there's a lot of paper out there.

The fact is that in the 1995 budget we talked about reduction of the number of headquarters by 25% and the number of headquarters personnel by one-third. Correct me if I'm wrong on that, Admiral Murray and the deputy minister. That means that in Ottawa we're going from 10,000 people to 5,000 people.

If the objective of your question is that the forces and the department have been a bit top-heavy, the answer is yes. We've recognized it and we're doing something about it. We're well on target to meeting our budget commitments of 1995.

Mr. Williams: On the changes on the west coast, Chilliwack, Calgary, Edmonton, there were figures put forward to demonstrate that savings were going to be achieved. Mr. O'Reilly raised some doubts about that. Are you on budget?

Mr. Collenette: Actually we're a little under. We're $9.4 million under what we anticipated spending.

I was in Calgary last night and somebody said it was going to cost $1 billion. I don't know where these figures come from. The critics obviously don't have all the facts that the department has. They do not include the cost avoidance of construction in Calgary, $131 million there. They don't factor in all these costs.

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Mr. Williams: I'm a little skeptical about some of these cost avoidances being used to justify additional expenditures.

The military engineers are moving from Chilliwack to Gagetown, I understand.

Mr. Collenette: Yes.

Mr. Williams: When?

Mr. Collenette: I think it will be done by the summer of 1997.

Mr. Williams: In this particular memo, the budget said it was going to cost $2 million to build a range.

Mr. Collenette: Sorry, the admiral wants to correct that.

VAdm Murray: Just to clarify, Madam Chairman, the engineering school moves to Gagetown. The engineering regiment moves to Edmonton to be with the rest of the brigade so that the brigade is together and can train together in Wainwright.

Mr. Williams: The document I had here, Mr. Minister, talked about a budget of $2 million to build a range in Gagetown, and I see in the estimates this year $3,293,000. The current estimated total cost is going to be $3.5 million, which is 75% over budget. Are you still on budget?

Mr. Collenette: Perhaps one of our officials would like to come forward. Mr. Adams is our assistant deputy minister in charge of infrastructure.

The Chair: Mr. Adams.

Mr. J.L. Adams (Assistant Deputy Minister, Infrastructure and Environment, Department of National Defence): I don't have the figures you're referring to. I wonder if you could clarify.

Mr. Williams: When the decision was made to move the engineers to Gagetown, it said$15.5 million for construction of accommodation and $2 million for a range. Now I see that this year we have $3.5 million, which is a 75% increase.

Mr. Adams: That is an increase.

Mr. Williams: Are you on budget?

Mr. Adams: On budget with the move to Gagetown?

Mr. Williams: No, with the building of the range. You went from $2 million to $3.5 million. That's a 75% increase.

Mr. Adams: Where was the $2 million and where was the $3.5 million? Were they in the estimates? I don't know where they were. I don't know what documents you're quoting.

Mr. Williams: The $3.5 million is coming straight out of this year's estimates.

Mr. Adams: All right, and the $2 million comes from where?

Mr. Williams: It comes from the budget document that I have showing the cost of moving the engineers to Gagetown. They're not going to Gagetown any more - they're going to Edmonton, as the vice-admiral said - but the range is still going to be built.

Mr. Adams: The only document I have is the estimates and that's $3.5 million. I have no idea where the $2 million is coming from. I'm sorry, I don't have that.

Mr. Williams: The $2 million is in the documents -

The Chair: It's in the Reform budget, I guess. Thank you, Mr. Williams. That's your time.

Ms Bethel.

Ms Bethel (Edmonton East): Minister, there are two outstanding concerns that Albertans have with the consolidation. While we in Edmonton are of course delighted to welcome the military families, and we recognize too the difficulties Calgary has in losing them, I think for all Albertans, no matter where they live, there are two issues outstanding.

One Mr. Williams tried to get at, as did Mr. O'Reilly. We really need some good, solid cost-benefit analysis so that we can at least understand some of the numbers being bandied about. Is there any evidence in support, or any studies or accountings that we can refer to and see clearly? The last one I have is February 1995.

Mr. Collenette: First of all, the discussions of consolidation went on in late 1994 or early 1995, before the budget. There are a lot of internal costs. Mr. Adams could perhaps answer you specifically.

When you talk about a cost-benefit analysis, do you mean to include the...? There certainly is a benefit to having the troops in an area closer to the range at Wainwright, where you can expand the base.

Ms Bethel: I know. Maybe I'll just ask the specific questions quickly, because there are two issues and I want to make sure I get both in.

.1645

You say it is $156.9 million to move the troops and $72 million in savings. I'm assuming that's operational.

Mr. Collenette: Those are the steady state costs.

Ms Bethel: You say that what is not factored in is cost avoidance. But that refers to capital, is that right?

Mr. Collenette: Yes, but wait a minute. When I said that the net consolidation cost for moving to Edmonton is $156.9 million, that factors in a cost avoidance in Calgary of $131 million.

Ms Bethel: So consequently your figures do factor in.

Mr. Collenette: Absolutely. That's a net figure, but even with that cost of $156.9 million the annual savings will be $72 million.

Ms Bethel: Yes, I got that.

Mr. Collenette: In fact, that's $10 million more than we were quoting a year ago, isn't it?

Ms Bethel: The other question I need help with so that I can respond to the concerns coming forward is about housing. Are the housing component and the disposition of the lands at both Namao and Currie factored into capital? I haven't seen any budget on the capital side.

Mr. Adams: No, the housing is not factored in. You're talking about personnel married quarters, that sort of thing?

Ms Bethel: Yes, the 1,200 PMQs that are claimed to be necessary.

Mr. Adams: No, that is not factored in.

Ms Bethel: Is the disposition of the lands factored into the capital?

Mr. Adams: No. Are you talking about the consolidation out of Griesbach to Namao?

Ms Bethel: Well, wherever.

Mr. Adams: No, that is totally unrelated. That was not a consideration when the budget was prepared.

Ms Bethel: Why would that not be a consideration? Why would that not be part of the capital cost?

Mr. Adams: Sorry, are you talking about housing again?

Ms Bethel: Yes.

Mr. Adams: The decision hasn't been taken yet to construct that housing. It obviously depends upon what the requirements in Edmonton are.

Ms Bethel: So there has been no factoring in of any costs or revenues on the capital side from the housing issue?

Mr. Collenette: They would have to be constructed. If you move out of Griesbach, obviously you're going to get revenues from the land that will offset the cost of building new housing.

Ms Bethel: Do you mean when you dispose of the land?

Mr. Collenette: The land would be disposed of.

Ms Bethel: Right, but none of those are included here.

Mr. Collenette: That is because, as Mr. Adams said, no decision has been taken yet. We want to consult local members and the council and all.

Ms Bethel: We're eagerly looking forward to it.

The other big issue in Edmonton and also in Calgary is exactly how we're going to go about the disposition of the lands. People are clearly looking for an open, transparent and public process that will determine new land uses for these surplus sites.

I know that those of us in this room care passionately about accommodating military families in great neighbourhoods with all kinds of facilities such as schools, pools and so on. Our concern is exactly how we are going to go about that.

I know they're doing studies right now on cost effectiveness and I've expressed my concerns to you. When will the results of those studies be available? When will they be made public? How will Edmonton stakeholders, beyond city council, be involved in a decision on the disposition?

Mr. Minister, just for your benefit and maybe for those here, we received a letter from two members of Edmonton city council who are quite concerned about the costs that may fall to the city if the location is at Griesbach. We need to be sure that this is cost-effective not just for us, but also for other orders of government.

Mr. Collenette: Madam Chair, the disposition of federal property has to follow certain criteria and it's handled by Treasury Board. Offers are made first to the provincial government, local municipalities, school boards, and then sold to the private sector at market value. That's clearly established and it has nothing to do with National Defence.

You have raised the element of costs that would accrue to the City of Edmonton for the influx of all these individuals. I would respectfully submit that Edmonton is going to come out of this a real winner financially. We are moving, I believe, 3,200 members of the Canadian Armed Forces from Calgary to Edmonton with all their families. That's over 5,000 people. So the tax base has increased. Yes, municipal services will have to be provided, but surely that's more than offset by the economic buying power of having those people in the community.

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Ms Bethel: There's no question on that at all, Mr. Minister.

The Chair: That's it. Thank you.

Monsieur Crête, five minutes.

[Translation]

Mr. Crête: In the $2 billion contract for the purchase of armoured vehicles, you decided that the contractor, in this case General Motors, would not be required to retain the services of a Canadian subcontractor. As for Oerlikon, there was no guarantee that the process for calling for tenders would be followed.

I'd like to know whether, following this operation, it was decided that the turret contracts would be granted to Oerlikon or whether they have been awarded to another contractor, perhaps even outside Canada.

I'd also like to know whether the carrier-based helicopter contract still provides for the acquisition of some 33 units and whether you have ensured that there will be a certain Canadian content or intend to repeat what took place in the case of the armoured vehicles.

Quebec has already undergone a very negative impact as a result of the cancelling of the EH-101 contract and is certainly undergoing its share of the defence cuts.

Mr. Collenette: We all know that Quebec comes first out of all the provinces with respect to capital expenditures relating to national defence.

We awarded a contract to General Motors in London Ontario for the armoured troop carriers quite simply because this firm has General Motors' mandate for the production of such vehicles.

As for the manufacturing of the turrets, Oerlikon in Saint-Jean, Quebec, assures us that they have the technology and the capacity to carry out this production. We've examined this situation both at Oerlikon and General Motors in order to compare the two and determine whether Oerlikon was really able to do this work.

We are now negotiating a contract with General Motors because it is important for us to have an efficient technology and to ensure Canadian taxpayers that these carriers will be acquired within a reasonable cost framework.

I'd invite Mr. Pierre Lagueux, Assistant Deputy Minister for Supply, who is in charge of the department's acquisition of equipment, to supplement my answer.

Mr. Pierre Lagueux (Assistant Deputy Minister, Supply, Department of National Defence): As the Minister said, we intend to negotiate a contract with General Motors, Diesel Division in London, Ontario, for the purchase of armoured vehicles. This contract applies to the full vehicle including the turret. General Motors will be the prime contractor.

As the Minister specified, Oerlikon said that it was able to provide the turrets but it will have to make an offer to General Motors as prime contractor for the full vehicle, including the turret.

We recently asked a third party to make an assessment of Oerlikon's capability.

Mr. Crête: Have you received an answer from this third party?

.1655

Mr. Lagueux: No, not yet. We expect to receive the report very soon but unfortunately there is some delay. The third party and Oerlikon had some difficulty in arranging a meeting where Oerlikon will be able to discuss its approach and present its point of view.

Mr. Crête: Since we are awarding the contract and providing the funding, why do we not insist that the contract be awarded to a Canadian supplier? Isn't the buyer normally able to set his conditions? What can justify this position?

Mr. Lagueux: It's obvious that we are paying for the vehicle. I'd like to point out that the Canadian content in the vehicle is high since it is being built in London, Ontario, and that a number of its other components, including the thermal weapons sights made in Montreal, are manufactured in Canada.

You specifically referred to the turrets and even in this particular case, there are beneficial spinoffs for Canada.

[English]

The Chair: That's it, Mr. Crête, thank you.

Mr. Collenette.

Mr. Collenette: It's been the position of this government that we are going to get, where possible, off-the-shelf equipment, equipment that will give the best value for the Canadian taxpayer. There may be some trade-offs with respect to Canadian content, although I thinkMr. Lagueux told you there will be a lot of Canadian content in the armed personnel carrier, including from many companies in Quebec.

But one thing this government is not going to do, Mr. Crête, is direct contracts simply for political regional economic benefit, as was done in other governments, because we have run into a lot of trouble getting equipment we don't really need. This government is prepared to take the political flak - and I'm not speaking specifically of Oerlikon here - because we think that could be justified to the taxpayers of all of Canada, including the taxpayers of Quebec in this particular instance, if that's the way it works out.

We have an open mind. We have a third party looking into the matter to see whether or not the claims made by Oerlikon are justified. That will be taken into consideration by Mr. Lagueux and the people in Government Services when they negotiate the contract.

The Chair: Thank you, Mr. Minister. I understand you have another engagement.

Mr. Collenette: No, we have to vote at 5:30 p.m.

The Chair: We do, but I thought you had something in between those two.

Mr. Collenette: Well, I can leave if you want.

Some hon. members: Oh, oh.

The Chair: Sorry. I will go now to Mr. Bertrand, and then Mr. Frazer has some questions he would like to ask.

Mr. Bertrand: Thank you very much, Madam Chair. I just have two very small things.

In your speech, when you talked about privatizing certain activities you mentioned support, food services, ship repairs and aircraft maintenance support. What does aircraft maintenance support include?

Mr. Lagueux: Aircraft maintenance support involves a variety of things, from the very heavy periodic maintenance done on aircraft to the simple maintenance done immediately at what we call the first line, or at the squatter level, which means replacing components with other components. So it involves a whole variety of different things.

Today we already do a considerable amount of aircraft maintenance in industry. All the so-called depot level or heavy maintenance of both the aircraft and components goes to industry to be done. What we are looking at is further involvement of industry. For example, we have said in the case of the search and rescue helicopter we would be looking seriously at full maintenance of that helicopter with industry. We are looking at getting off-the-shelf type of equipment, and wherever possible, commercial equipment, moving more and more towards industrial involvement.

Another example is the utility tactical helicopter, the Bell 412, a commercial helicopter, being maintained to commercial standards, wherever possible, involving industry more.

.1700

Another example is our fleet of A-310 transports, which we fly, but essentially the full maintenance is done at this time in Trenton on a contract to Canadian Airlines, which looks after the airplanes. So it can involve a whole different range of aircraft maintenance.

Mr. Bertrand: Is there a system in place of guaranteeing the safety of the personnel using these aircraft? I don't know if you know what I mean.

Mr. Lagueux: Perhaps you could elaborate.

Mr. Bertrand: I know Canadian Armed Forces personnel are very well trained to look after the aircraft and do the maintenance. Are we assured that these high standards will be kept up by private industry? Is there a system in place that will guarantee us that?

Mr. Lagueux: Absolutely. One should remember that civilian airlines, of course, are very concerned about their safety and their airworthiness no less so than we are. All the aircraft repair or maintenance done with industry is subject to very stringent controls and specifications.

Where we are looking at commercial airplanes, then they're done to commercial standards, Transport Canada standards or FAA standards, under those regulations, under supervision. Of those standards where we're looking at purely military airplanes, then we ensure that there are extremely stringent military specifications or standards to ensure that all the work is done to ensure full safety of our equipment - and that is for military, commercial airplanes, or any other equipment we have. Standards of work reflect the agreed standards of airworthiness.

Mr. Bertrand: Thank you.

My last point is probably just a point of clarification. When a base is sold, the proceeds of that sale do not go to National Defence.

Mr. Collenette: It goes to the treasury - unfortunately.

Mr. Bertrand: I'm sure with the base closures the government had to do in the last couple of years... In 1994, for instance, can you tell me roughly how much money was put back into treasury? How much was sent back to treasury? Does anybody have an idea?

Mr. Collenette: I think you'll have to ask Mr. Massé that. They don't tell us what they get out of these deals.

Mr. Bertrand: Once it's set up for sale, you're out of it, then.

Mr. Collenette: Once we close the facility then it's up to the Treasury Board to dispose of the facility. In some cases we have been involved in the transition, as we were with Chatham. We made an agreement with the Government of New Brunswick, together with Human Resources Development and Industry Canada, under the Atlantic Canada Opportunities Agency so that New Brunswick now is in the process of taking over the full liability of that particular facility.

At Downsview, for example, we're going to retain ownership because we are going to create an urban recreational redevelopment there, some revenue-bearing but largely recreational. But there is what we call an ``orphan'' piece of land, the southern portion of the runway, which is highly desirable commercially. It is now being sold. The revenues from that will go to the Treasury.

So when we close something, or we say we don't want that piece of land, and the Toronto Transit Commission wants expansion for subway yards, they deal with Treasury Board and pay whatever they pay for that piece of land off the Downsview base. The money goes into the consolidated revenue fund.

Mr. Bertrand: Maybe we could make a recommendation, Mr. Minister, that the money be sent back to National Defence.

Mr. Frazer: We did that last year.

Mr. Collenette: Madam Chair, the Assistant Deputy Minister of Finance would like to say something.

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Mr. Robert M. Emond (Assistant Deputy Minister, Corporate Services Branch, Department of Finance): Thank you, Minister.

Madam Chairperson, I think it is important to note that while today the money flows into the consolidated revenue fund, we have been working with officials of Treasury Board for about 11 months now to generate some kind of reasonable distribution of the revenues so that some does accrue back to the department. In fact, if you look at our estimates, some of the savings are understated by virtue of disposition of real estate. They would not be reflected in our estimates, if I recall the comment of the previous member.

The Chair: Mr. Frazer.

Mr. Frazer: Thank you, Madam Chair.

Mr. Minister, you probably won't agree with me, but I contend that the armoured personnel carriers our personnel are operating in Bosnia right now are inadequate for the purpose to which they're committed. My question is, how soon do we expect to be able to provide them with the upgraded equipment that will in fact give them protection against mines and against gunfire and that I think are at the moment inferior protection?

Mr. Collenette: Mr. Lagueux can talk about the delivery of this. If we get the contract awarded, it will be later on next year.

But on this whole question of APCs, there's a lot of misinformation there. The fact is, the previous government committed us to Bosnia, to a lightly armed peacekeeping mission. They sent equipment there, as did our allies, for a light mission. But there was a turn of events that made it a much more dangerous mission, and therefore the equipment was not, obviously, sustainable.

Generally when we get into those nasty combat situations we get in with our allies, as we are now in IFOR. Whatever capability we don't have is made up by our allies so that there is no vulnerability to Canadian troops. But what this did, I think, in terms of public opinion and politically, was to heighten the fact that we had armoured personnel carriers, 30 years old, that were inadequate, and it helped speed up the decision to have new APCs.

I don't know, Mr. Lagueux, when they will be coming on once you get the contract negotiated.

Mr. Lagueux: The current schedule calls for delivery of the first vehicles - that is, 240 of the first phase that was announced - by December 1997, January 1998.

Mr. Frazer: Mr. Minister, you may recall that in the House I recommended to you that rather than deploy an army unit with the IFOR we in fact commit an air squadron, which would have permitted us to let the army rest and relax a little bit after their heavy commitment in the former Yugoslavia. It would have provided a very viable commitment to the IFOR and wouldn't have exposed our troops to the dangers.

You said our allies are always around, but if a troop is out in an APC and they come under heavy machine-gun fire, the allies are not going to help them a darn bit. They're vulnerable.

Mr. Collenette: I think we should get somebody from the army here, perhaps Admiral Murray, to talk about what we're actually doing in Bosnia. But we are providing a headquarters function and certain logistics functions. We do have an infantry capability. We are working with our allies. Where we don't have the equipment that perhaps would be appropriate for a particular task, we are using our allies' equipment.

On the question of the use of the air force rather than ground forces, frankly, NATO really wanted ground troops. I think they were a little short even as it ended up. So we were really pressured to put in at least 1,000 ground troops.

Do you want to say something, Admiral?

VAdm Murray: No, I think you've answered.

The only point I would want to make, and I presume Mr. Frazer is aware of it, is that we have upgraded the APCs in theatre with strap-on armour, ballistic blankets and that sort of thing. They're not operating in a situation with which the army commanders are uncomfortable.

That's not to say we don't need new APCs and that type of thing, but the vehicles there and the force that was put together was capable, in the minds of the army commander, of doing the job they were asked to do.

Mr. Frazer: Admiral, if I may, though, they were under-engined to start with, and when you threw a whole bunch of armour on top so that you really under-engined them... And we're still suffering mine casualties, although not recently, and I hope no more, in the APCs, which I don't think are adequately sheltered.

Mr. Collenette: I don't know whether we did get any hit by mines.

VAdm Murray: Early on, yes, but I don't think we've lost anyone in an APC hit by a mine.

Mr. Frazer: Not lost, but wounded.

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VAdm Murray: In fact, I think only one APC was hit, and no one was killed.

Mr. Frazer: We had wounded, though.

VAdm Murray: There were minor injuries - I think.

Mr. Frazer: I saw the APC.

VAdm Murray: In fact, in all our APC mine strikes, both the wheeled ones and the tracked ones, the wheeled ones have been excellent. When the tracked one hit the mine, I don't believe there were serious injuries. But I would acknowledge that this was luck.

Mr. Frazer: There was considerable damage to the inside of the APC.

You've just come back from Haiti, Mr. Minister. Did you get a feel there of whether or not our four-month commitment is going to be in any way reasonable, or are we going to be required to extend beyond that?

Mr. Collenette: My personal view is that the international community should not walk away from Haiti. I will express this view at cabinet. That doesn't mean to say Canada will recommit, because as I said to Mr. Crête a little while ago, we can't expect the taxpayers of Canada to pay the full shot of peacekeeping missions. As it is, we are committed to the $24 million. We would have gotten back about $16 million.

I think it would be a real tragedy if the international community walked away from Haiti after investing five years in democratic development, in the restoration of democracy. It's a country where they need a lot of assistance in the development of civilian policing functions, in the building of an infrastructure.

The hospital there doesn't qualify as a hospital in the terms you and I would know. It's an absolute tragedy of a place, and I would hope the UN would be able to get its act together to extend the mission if that is indeed what the President wants. He hasn't come out and said that point blank, but certainly I don't know what would happen if the UN left.

Our people go out on night patrols into Cité Soleil, into the worst possible places in Port-au-Prince, and they are respected. A lot of that respect is the fact that they can actually communicate with the people in French. We have, I think, six or eight Creole-speaking members of the armed forces who have Haitian heritage or who are originally from Haiti. That makes a difference.

The figures I was shown are incredible. Murders and executions have gone down in number, rapes have gone down in number, violations against property have gone down in number. So the UN force there, headed up by Canadians, has made an incredible difference, and I think probably has made more of a difference than the 20,000 people who were there, largely anglophones, American troops and others. Yes, they preserved order, but it's just not numbers you need, it's sensitivity to the local population, understanding and working with the local authorities.

So I think it's been a very successful four months.

The Chair: Mr. Crête.

[Translation]

Mr. Crête: Can you assure us that when you purchase the carrier-based helicopters, you will not be spending huge amounts of money on antisubmarine equipment at a time when there is little justification for it? Have you already established a position on this? Can you assure us that there will be no such spending?

Mr. Collenette: We will be examining all the possibilities related to this project. We have not announced the purchase of maritime helicopters although, as you know, I did announce the purchase of helicopters for search and rescue operations and we did obtain a reduced cost as a result of the vehicle's reduced capacity. The previous government was looking for a vehicle that the Prime Minister described as a Cadillac whereas we do not require a helicopter with all the equipment contained on the EH-101. An assessment of our present requirement is now under way. Vice-admiral Murray, who is an expert as a naval officer, can give you more information.

.1715

VAdm Murray: We've reduced our operational requirements by approximately 25%. Unfortunately, I cannot be more specific at the present time but as the Minister said, a study is under way.

Mr. Crête: Concerning anti-submarine equipment, I suppose that you cannot give me a definite answer since the matter is under study.

VAdm Murray: These helicopters are to be multi-purpose and this includes a number of anti-submarine capacities. Some of these capacities are to be reduced, as are others, so that we can agree on an acceptable price.

Mr. Crête: Thank you.

[English]

The Chair: Mr. Williams, I believe you had a short question.

Mr. Williams: I have more than a short question, Madam Chairman.

The Chair: You'd better be careful. I may cut you off.

Mr. Williams: Mr. Minister, your ADM of finance just said that the estimates are understated regarding revenues potentially received on disposition of property. Aren't the revenues anticipated on the disposition of property going to show up in Finance estimates as well?

Mr. Emond: I would expect revenues from the sales to appear through the part IIIs of Public Works and Government Services.

Mr. Williams: So is an indication of revenue being recorded?

Mr. Emond: Not at all.

Mr. Williams: So you have reduced your estimates by the anticipated revenue, and Public Works are showing the revenue as coming in.

Mr. Emond: No, we don't reduce our estimates. Our estimates -

Mr. Williams: Isn't that what you just said?

Mr. Emond: No, I was indicating that for the sale of real estate we do not reflect those revenues anywhere in our estimates. In terms of the total cost of the Edmonton situation, there may be revenues accruing to the Government of Canada that are not reflected anywhere in the information that is currently before the committee - or the information my colleague was discussing.

Mr. Williams: In setting up -

The Chair: Thank you.

I have a short question from Mr. O'Reilly.

Mr. O'Reilly: I was going to move adjournment, Madam Chair.

The Chair: In that case, I think we had better adjourn.

Mr. Minister and officials, thank you and please come back and see us anytime.

This meeting is adjourned.

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