National Defence Committee on Nov. 27th, 2012

[The Chair, Conservative, James Bezan]

I call the meeting to order.

Good afternoon, everyone.

Joining us to consider the supplementary estimates (B) is the Honourable Peter MacKay, Minister of National Defence. He is joined by a number of officials from the Department of National Defence.

We have Robert Fonberg, the deputy minister; Matthew King, associate deputy minister; Vice-Admiral Bruce Donaldson, Vice-Chief of Defence Staff; Major-General Robert Bertrand, acting chief financial officer; Major-General Ian Poulter, chief of programming; and Rear-Admiral Patrick Finn, chief of staff of the materiel group. As well, from the Communications Security Establishment we have John Forster, who is the chief.

I welcome all of you here.

Mr. MacKay, you have the floor.

[Peter MacKay, Conservative, Minister of National Defence]

Thank you, Chair. Thank you, colleagues. I'm very pleased to be with you to discuss today the supplementary estimates (B) for the year 2012-13.

I note this is my 31st appearance as a minister before committees and my 11th before this particular committee as Minister of National Defence. It's nice to have that warm familiar feeling.

You've already pointed out, Mr. Chair, the key members of the defence team who are joining us. They are prepared to answer questions as well.

Turning to the supplementary estimates (B), I want to take a few moments to highlight some of the key points I'd like to make for the committee.

Overall, through this estimates process, the department will actually see a decrease of approximately $15.7 million in spending authorities for the current fiscal year. More specifically, it will involve an increase of $146.8 million within our operating expenditures, and a decrease of $162.5 million in the department's capital expenditures.

Mr. Chair, colleagues, the Department of National Defence is looking for ways to make some internal spending adjustments. In broad terms, this includes additional funding for key equipment projects for the army, navy, and air force, like the design of new warships, procurement for tactical patrol vehicles, definition funding for the fixed-wing search and rescue project, further investments in science and technology, and for the reimbursements of the Pension Act offset under the Canadian Forces Service Income Security Insurance Plan, known as SISIP.

We have identified ways to meet the specific funding needs through decreases in spending in other areas of the Department of National Defence and through reallocations of previously approved budgetary resources.

There is no requirement for additional budget appropriations through the supplementary estimates this year. I'm pleased to report the Department of National Defence remains on track to deliver within its spending authorities for the fiscal year 2012-13.

While the spending adjustments being sought for supplementary estimates (B) are modest in nature, they are necessary in order for the department to deliver on important commitments and to give the Canadian Forces the tools they need to continue protecting Canada and Canadians.

Today's discussion also reflects the ongoing imperative of balancing the requirements of the Canadian Forces with the need to protect Canada's fiscal health.

We are in a different time, yet we continue to play that very important role of protecting Canada's interests at home and abroad. We all have a role to play in this regard, and I'm proud to say the Department of National Defence is very much doing its part.

I imagine the committee has quite a few questions on the specifics of the supplementary estimates package. I'm pleased to hear the committee's thoughts and to answer any questions you might have. I would like to take this opportunity to thank you for your ongoing efforts on behalf of the Canadian Forces and all Canadians.

[The Chair, Conservative, James Bezan]

Thank you for your brief opening remarks, Minister. It allows us more time in the one hour we have with you to ask questions.

Mr. Harris, you have the floor.

[Jack Harris, NDP, St. John's East, NL]

Thank you, Chair.

I want to thank the minister for joining us today and for offering to be helpful in answering questions.

First, although there are not significant increases in the requests for funding here, I would have expected that there might have been some significant differences between what we saw in the budget and the original main estimates and what we have here, particularly in view of the letter the Prime Minister sent you in June. It suggested that there was unhappiness with the level of the changes expected to be made in terms of reducing current overhead, etc. I think the minister is aware of the letter.

I wonder if you could tell us why we're not seeing anything here that reflects some of the matters mentioned in the letter, including some of the matters we saw in General Leslie's report of last August.

[The Chair, Conservative, James Bezan]

Just so you know, I will again caution committee members that we are specifically on the topic of supplemental estimates (B) and the opening comments made by the minister.

Minister, I'll leave to your discretion what you wish to answer and whether you feel that it's outside the testimony we're requiring today.

[Jack Harris, NDP, St. John's East, NL]

Mr. Chair, if I may, on a point of order, it's up to you to decide that, not the minister. We're talking about the estimates. We have expenditures in excess of $15 billion suggested in the estimates. I think anything in that range is fair game for questions. If the minister decides not to answer, it's up to him.

[The Chair, Conservative, James Bezan]

We've already dealt with everything in the budget and in the original estimates. What we are dealing with now are the votes 1b, 5b, 10b, 20b, and 25b. Those are the votes we're looking at and the reallocation of money within the department's budget.

If you could, be specific, Minister, to those areas.

[Peter MacKay, Conservative, Central Nova, NS]

Thank you, Mr. Chair. I'll abide by your ruling.

We face new challenges. I think everyone around this table is aware of the fiscal situation globally. Canada, fortunately, is in a better position than most. At the same time, we have to ensure that the Canadian Forces, like all departments in government, are maintaining the resources necessary to do the important work tasked to our men and women in uniform and that they are also exhibiting flexibility.

We are ensuring that we are making prudent decisions with taxpayers' money and that we are continuing to be guided by the principles laid out in the Canada First defence strategy, which was a hallmark commitment made by the government of the day. We put this document forward to allow for long-term planning that would provide certainty. It would provide the Canadian Forces with the resources they need to deliver on the many important commitments we have as a country, in Canada and North America and in missions such as Afghanistan, Haiti, Libya, and others that are ongoing.

There was a transformation report, which was referred to by Mr. Harris. That report is one of the many documents and inputs we look to as we face important decisions with respect to funding. We're in relatively good shape. The report itself, which helps us to make better use of and to better focus the resources we have available to us, will continue to see the Canadian Forces grow. We will continue to see our capabilities and our readiness in a place so that all Canadians can have confidence in what the Canadian Forces offer them.

[Jack Harris, NDP, St. John's East, NL]

Well, that's not much of an answer, Mr. Minister. I say that with respect.

In your remarks, you said that the estimates would actually involve an increase of $146.8 million in operating expenditures, yet the Parliamentary Budget Officer, in a report issued November 19, says that what we had in the Department of National Defence was the single largest change, by value, between last year and this year, on $900 million. In fact, it is the lowest expenditure since 2009.

We have significant decreases in operating budget expenditures within your department. The Parliamentary Budget Officer has been trying to get you and your department to identify where they are. Can you commit to giving the Parliamentary Budget Officer these answers so that he can do his job under the act and so we can help this committee and other parliamentarians do their jobs of holding the government to account?

[Peter MacKay, Conservative, Central Nova, NS]

I'm always cooperative with you—

[The Chair, Conservative, James Bezan]

Go ahead on a point of order, Mr. Alexander.

[Chris Alexander, Conservative, Ajax—Pickering, ON]

Mr. Chair, further to your previous ruling, we on this side are really not sure what the Parliamentary Budget Officer has to do with consideration of the supplementary estimates (B).

[The Chair, Conservative, James Bezan]

Agreed.

In follow-up, we have Mr. Harris.

[Jack Harris, NDP, St. John's East, NL]

He wrote a report, Mr. Chairman, pursuant to his authority to do that. He made reference in his report to that. In fact, in the explanations on page 105 of the supplementary estimates (B), which we all have in front of us, in terms of looking at the explanation of funds available, vote 1 talks about $239 million in total authorities available, $90 million within the vote due to savings identified as part of the budget 2012 spending review and $148,456,901 available from vote 5 due to the reprofiling of previously approved capital resources, so we are certainly within the estimates themselves in talking about where this money is coming from and what the result is of the reductions. The Parliamentary Budget Officer is on the same topic, asking the same kinds of questions, so I don't see how it's out of order, Mr. Chair.

Obviously we'll accept your ruling, but I don't see how we can have a debate or questions on the estimates and not deal with what's in the estimates themselves. The Parliamentary Budget Officer is an officer of Parliament who is here to assist us in doing our job.

[The Chair, Conservative, James Bezan]

Thank you for that.

As Mr. Harris has said, this is on supplementary estimates (B) and those specific areas that the Parliamentary Budget Officer relates to in his report. I'll let those questions stand.

[Peter MacKay, Conservative, Central Nova, NS]

Thank you, Chair.

As I said in my opening comments, our department is not requesting additional appropriations here today. As for new spending authority, this is found within the amount of $370.7 million that was referred to by Mr. Harris. These funds will be absorbed, which is to say that these funds will be found in-house, where funds are available.

The funds available include $91 million for the budget 2012 spending review. In addition, another $280 million is available due to changes in the timelines of equipment acquisitions and infrastructure projects. As I'm sure you're aware, there have been projects that will occur over a longer period of time, and the department is committed to the effective stewardship of public funds, as in all cases.

I would also note that with the change in operational tempo, we no longer have our soldiers in a combat mission in Afghanistan. There has been very much of a change with respect to our commitment there. We still have just under 1,000 soldiers who are continuing to do great work in Kabul. I visited them during the Remembrance Week. I can report to you that they continue to make Canadians proud with their efforts to train up Afghan soldiers and police as we continue to contribute internationally.

[Jack Harris, NDP, St. John's East, NL]

Mr. Chairman, we hear you in terms of absorbing $90 million in-house, but there's an issue of transparency here too. The public wants to know what that $90 million is not being spent on and what the changes are. When you're dealing with the estimates here, there's an opportunity for you to inform this committee and the House.

For example, we had something leaked in the last 24 to 48 hours—by your department, I understand—that four of the six Challenger jets will be removed from service, which is not a bad idea. It was something we suggested when they were flying them around just to give pilots time to ensure that they kept up their state of readiness.

Was that in the budget as part of the plan, or is that something that's just been readjusted along the way? Is that something that could have been announced last spring when the budget was brought forward, or is this something that you're just readjusting along the way and passing out information as it suits you?

[Peter MacKay, Conservative, Central Nova, NS]

Mr. Chair, with respect to all internal decisions, they're announced when they're announced. They're not done through leaks.

With specific reference to Mr. Harris's question, what I can tell you about internal decisions is that we continue constantly to look for ways in which we can find greater effectiveness in the delivery of programs, in the acquisition of various major procurements for the Canadian Forces and improvements in programs and delivery. That will continue regardless of this supplementary estimates (B) request or others.

I will let Major-General Bertrand speak to some of the specific allocations that are referred to here, the $91 million for budget spending review this year.

[Jack Harris, NDP, St. John's East, NL]

Perhaps we can do that after you're gone, Mr. Minister.

[The Chair, Conservative, James Bezan]

Mr. Harris, your time has expired.

If the general wants to respond briefly, I will allow him to. Otherwise, we can move on to the next questioner.

[Major-General Robert Bertrand, Acting Chief Financial Officer, Department of National Defence]

Thank you for the question.

The $91 million was part of the budget 2012 announcement. Budget 2012 came out after our main estimates; therefore, those funds were frozen after the budget announcement and are now available within the department for reallocation for spending requirements within the supplementary estimates.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Alexander, you have the floor for 10 minutes.

[Chris Alexander, Conservative, Ajax—Pickering, ON]

Thank you, Chair.

Thank you, Minister, and to your team for being with us today.

You mentioned in your opening statement that the Department of National Defence is not seeking any new money and that in fact you will see a decrease of approximately $15.7 million in spending authorities for the current fiscal year in the supplementary estimates. Given the fiscal context, and given our efforts to balance the budget, those are very important facts for us on this committee and for Canadians.

However, there are a series of transfers taking place between departments to National Defence, and some internal reallocations. The latter you mentioned in your remarks and answers to Mr. Harris. Would you be able to explain in more detail what some of the transfers among departments are and if there are any other reallocations within the department that you didn't get a chance to mention earlier?

[Peter MacKay, Conservative, Central Nova, NS]

Sure. Thank you very much for the question, Mr. Alexander.

We're looking at a number of key acquisitions that are ongoing. As you know, we've committed a great deal of time and effort and resources for the care of ill and injured members of the Canadian Forces. We place top priority on the treatment and care of our personnel.

There are also infrastructure needs that are ongoing. We have aging infrastructure spread out across the country, some of which is in need of replacement. After having seen a period of significant growth within the Canadian Forces—upwards of, in some cases, $1 billion annually since we took office in 2006—we're in a different fiscal climate now. We're looking to tighten our belts in some regard on a number of these projects, and our department is doing that.

That said, we're looking at these supplementary estimates as an opportunity to see funding for acquisition of things such as the new tactical armoured patrol vehicle, the surface combatant project, a fixed-wing search and rescue, and the settlement I mentioned in the SISIP case, the class action suit. While we're not seeking new appropriations from Parliament, the supplementary estimates continue to provide spending authority requests that can be absorbed internally. These funds include savings of $91 million from this year's budget. An additional $280 million is being made available for changes in the timelines and the acquisitions of some of that equipment, and some of the projects themselves.

You would be aware that we partner with the Department of Public Works and Government Services on many of these new builds and refurbishments of various buildings and infrastructure across the country. We partner with other government departments. That also sometimes accounts for the challenges in moving forward on these projects.

[Chris Alexander, Conservative, Ajax—Pickering, ON]

Thank you, Minister.

You also mentioned you had the opportunity in question period today to mention an honour recently paid to our search and rescue technicians by the International Maritime Organization.

Obviously search and rescue is an important function across the country, in all parts of the country, and it's one we often discuss in this committee. Could you give us a quick update with regard to these supplementary estimates (B) on where we are with regard to procurement of the fixed-wing search and rescue aircraft, as well as outline any other projects that are helping the Department of National Defence's partner agencies and departments with search and rescue initiatives to make sure that capacity remains strong and indeed continues to strengthen?