Government Operations Committee on June 14th, 2011

[The Chair, NDP, Pat Martin]

Ladies and gentlemen, I call the Standing Committee on Government Operations and Estimates to order.

We're very grateful and pleased to have the Minister of National Defence and the Associate Minister of National Defence join us on very short notice to defend the main estimates and the supplementary estimates, as I understand.

Welcome to anyone who is sitting in for this relatively special meeting.

Minister, you have opening remarks. We'll do that first and then we'll open it to questions.

Welcome.

[Peter MacKay, Conservative, Minister of National Defence]

Thank you very much, Mr. Chair and colleagues.

Before I begin my remarks, I want to formally introduce the other witnesses who are joining me here today, Mr. Chair.

This is Robert Fonberg, Deputy Minister of the Department of National Defence. To my far right is Kevin Lindsey, Assistant Deputy Minister with respect to finance and corporate services. You've already mentioned the Associate Minister of National Defence. Beside him are Vice-Admiral Bruce Donaldson, Vice-Chief of the Defence Staff, and Dan Ross, Assistant Deputy Minister for materiel. These gentlemen will also be participating in the committee hearing and will be pleased to take your questions as well.

I am pleased to be back before the committee. I understand this is the first one of this new Parliament. I am always pleased to be here and to associate with the fine work of the men and women of the Canadian Forces.

Mr. Chair, I also want to issue a special welcome to new members of Parliament sitting on this committee. As I mentioned, I am joined by other members of the department who are also able to assist in answering any questions they might have.

Mr. Chair, as the estimates clearly reaffirm, the government is committed to providing our men and women in uniform with the necessary resources and tools.

And we're committed to doing so in a fiscally prudent manner, making sure that our investments in defence are adapted to the evolving economic and fiscal situation.

Colleagues, our focus at defence remains delivering results for Canadians and for our country. The government's investments in the Canadian Forces are all about giving the government, through the Department of National Defence and the Canadian Forces, the capabilities to defend the interests and the values of Canadians at home and abroad, now and for decades to come. As Chief of the Defence Staff General Natynczyk often says, the defence of Canada begins thousands of miles from our shores.

As you all know, Canadian Forces have been extremely busy, especially over the past 18 months. It has been, in fact, our highest tempo of operations in 60 years.

At home the Canadian Forces have played, and continue to play, a key role in assisting local authorities, law enforcement agencies, and other federal departments. Last year they helped with operations to secure major events here in Canada, welcoming the world twice, once at the Vancouver Olympic Games and again at the G-8 and G-20 summits. They stand on guard 24 hours a day, seven days a week. They are ready to conduct search and rescue operations to relieve those in distress on Canadian territory or in our waters. We have, in fact, the largest land mass and coastal search and rescue territory on the planet.

Each year they participate in an average of 1,100 search and rescue operations. Year in and year out, they continue to exercise Canadian sovereignty in the Arctic, with several patrols and three major annual sovereignty operations. They are always ready to answer the call in cases of natural disaster, as we have seen, sadly, in recent days. We've noticed how they've provided critical help in the aftermath of Hurricane Igor in Newfoundland and Labrador, and more recently in delivering much-needed assistance in Quebec, Manitoba, and northern Saskatchewan.

All of this adds up to the Canadian Forces' daily tasks in defence of our country. On the world stage, our men and women in uniform are often the first on the ground in difficult places, demonstrating Canadian leadership in chaotic and dangerous environments.

Last year, Mr. Chair, you would know that thanks to the investment of the government, we were able to recruit, train, and equip our men and women in uniform as never before. Canada was one of the first nations to answer the call from Haiti and answer Haitians' need for assistance in the aftermath of the devastating earthquake that struck their island country. We sent C-17s, Hercules, ships, helicopters, and a very capable Canadian Forces task force to that country.

In Afghanistan, the Canadian Forces have fought a brutal enemy, and provided security for Afghans and for Canadian whole-of-government efforts to undertake and sustain development.

Over the coming weeks in July, the Canadian Forces will end their combat operations in Kandahar and transition to their new non-combat training mission in the north and mostly centred around Kabul.

They will play a central role in training the Afghan security forces so that they can assume responsibility for security in their own country by 2014, as laid out by the Afghan government and ISAF partners. This is the ticket home.

And today in Libya, after working to evacuate Canadians and other nationals, the Canadian Forces—along with allies and partners—are playing a leadership role in the international community's efforts to enforce UN Security Council resolution 1973 and protect Libyan civilians.

Mr. Chair and colleagues, the government recognizes the importance of ensuring that our military remains strong, flexible, agile, and dependable, so that our men and women in uniform can adapt to, and continue to perform, the crucial missions that Canadians expect of them at home and abroad.

Since our government has taken office, the defence budget has grown substantially--by almost $8 billion, in fact, an average of over $1 billion a year since 2006--but we also understand that during this period of fiscal restraint, national defence must contribute to the overall efforts of the government to restore fiscal balance. You will recall that in this spirit of responsible growth, Budget 2010 included provisions to reduce the increase in defence funding. Last year the Department of National Defence undertook a strategic review to examine its spending and achieve savings. The department provided the government with one of the most comprehensive and rigorous reviews produced to date, and we had outside assistance in that regard.

As part of the government's effort to ensure best value for tax dollars, over the course of the past few months the Department of National Defence and Canadian Forces have identified numerous efficiencies that do not affect the core capabilities of readiness of our military. As Budget 2011 notes, we have identified efficiencies and saving proposals and we are on track to achieve targets established in Budget 2010. We are now doing it in a way that will allow defence to better focus resources to deliver on the Canada First defence strategy commitments. Our efforts to review and optimize resources in support of the strategic review--with, as I mentioned, the help of outside independent advisers--facilitated Canada's ability to identify opportunities for reinvestment into transformational activities at defence to rebalance resources, to better align investments against top requirements, and to control spending.

This is critical to immediate success for National Defence, but also to the continued pursuit of more value for Canadian taxpayers' money.

And now, the government has launched another Strategic Operating Review to identify the additional savings that will be needed to balance the overall budget by 2014-2015.

Defence will do its part and contribute to the overall government effort. Defence takes its role as a steward of public resources very seriously. We make—and will continue to make—every effort to ensure sound financial management of taxpayer dollars.

In conclusion, Mr. Chair, Canada has emerged from the recent economic and financial crisis in better condition than most countries, including our G-8 partners. However, responsible spending, efficiencies, and a healthy fiscal environment require and dictate that we must always remain in sync within the department. At the Department of National Defence we are ensuring that all our activities are aligned towards the government's key and core priorities. We are realizing efficiencies and savings that are helping the government reduce its spending and achieve fiscal balance.

The government understands, however, that fiscal responsibility cannot come at the expense of our men and women in uniform and what they are accomplishing for Canada and Canadians every day.

Funds requested under the main estimates will help ensure that the Canadian Forces continue to be operationally effective and successful; that important equipment and infrastructure projects remain on track; and most importantly, I would suggest, that we do everything to take care of those fine men and women in uniform who do so much for us.

In conclusion, the government remains firmly committed to the modernization of the Canadian Forces and to their effectiveness for our overall defence team to deliver the Canada First defence strategy. We are delivering for Canadians every day here and abroad. We will continue to do so.

I look forward to your questions.

Thank you.

[The Chair, NDP, Pat Martin]

Thank you, Minister MacKay. I'm sure they will be looking forward to asking you some questions.

We will have five-minute rounds. I advise members to be cognizant of the fact that the five minutes is for your question and your answer, so if you have more than one or two questions, please keep them short. Perhaps the minister and others could keep their responses to roughly the same length as the questions in order to get in as much material as we can.

The first questioner for the official opposition is Nycole Turmel.

[Nycole Turmel, NDP, Hull—Aylmer, QC]

Thank you, Mr. Chair.

Thank you for your presentation.

The federal government is currently talking about eliminating jobs and laying off employees. However, if we read your estimates, we can see that there are many problems. For two years in a row, the department returned $1 billion of unused money.

The Auditor General's scathing critique last fall of the helicopter procurement and the Parliamentary Budget Officer's analysis of the planned acquisition of the F-35 fighter jets are two more examples of budgeting failures by this department.

We think that the current government should look into these issues before eliminating jobs.

I'd like to hear your thoughts on that.

[Peter MacKay, Conservative, Central Nova, NS]

Thank you for your question. This is not an issue of work-related costs.

In examining the reduction in workforce, we have made a very diligent effort thus far to take every step possible to ensure that it happens in keeping with the regularly scheduled retirements that will occur, meaning attrition within the department itself.

I take issue with your characterization as “failures” with respect to the helicopter and F-35 programs. Both of those programs are proceeding on budget and on time. As well, we disagree with the Parliamentary Budget Officer's assessment, which essentially calculated his estimate of the future cost of the F-35 on the weight of the aircraft. We think that is fundamentally flawed and not in keeping with good budgetary practices in determining the cost of a procurement.

We have received recommendations, in particular from the Auditor General, that we have taken on board and accept. There are always ways we can improve efficiencies. There are always ways in which we can improve procurements, in many cases. I look forward to working with the new Associate Minister of National Defence specifically on some of those procurement projects, and in particular facing full on the challenges that exist in these very complex procurements that often involve multiple departments and a challenging economic environment.

In the case the new Cyclone helicopters, for example, we had work stoppages at Sikorsky. We had problems specific to the company that were well beyond the reach and the grasp of the Department of National Defence, yet we had to contend with those issues. The result was what I would describe as an aberration, in that we returned money to taxpayers. However, I think taxpayers would be happy to know that the department had returned money, as opposed to not being able to account for it. I would suggest that would be a far worse problem to contend with.

[The Chair, NDP, Pat Martin]

I see that you have no more questions. You have a minute and a half left in the NDP question period. Is there anyone else?

Go ahead, Alexandre.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Ministers, thank you for being here.

My question is about a rather impressive figure on page 244 of the main estimates. The government wants to increase recruitment spending by 134%, despite a difficult budget framework. There are figures in brackets, which means they are cuts.

I would like to know what the justification is for a 134% increase in recruitment spending.

[Peter MacKay, Conservative, Central Nova, NS]

Quite simply, we need more people. We've committed to it. It's in the Canada First defence strategy, which I would refer to you as a very important part of your coming to grips with the intentions, the plans, and the long-term commitments of the department. This plan sets out the intention to grow the department and the personnel from the current state of readiness of about 68,000 to 70,000 regular force and 30,000 reservists.

We've had a very successful recruiting period over the last few years that has seen Canadians who want to take part in and be a part of the Canadian Forces come forward in record numbers. This is in part attributable to the increased awareness of the role that the Canadian Forces play internationally, the increased attention that has come about as a result of the very active engagement by the Canadian Forces in local events, and a very deliberate attempt by the department to reach out to Canadians in a way that demonstrates that the Canadian Forces are one of the most important and most valued institutions in the country. That commitment, that budgetary allotment, is very much in recognition of our intention to continue to grow and professionalize the Canadian Forces.

[The Chair, NDP, Pat Martin]

Thank you, Minister.

That concludes the five minutes for the NDP.

Next we have Kelly Block for the Conservatives.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you very much, Mr. Chair.

I'd like to thank our witnesses for being here today with us.

First let me congratulate both Minister MacKay and Minister Fantino on your successful re-elections and on your recent reappointment and appointment to this very important ministry as Minister of National Defence and Associate Minister of National Defence respectively.

My questions will be for Minister MacKay.

In your opening statement, you stated that the estimates clearly reaffirm that the government is committed to providing our men and women in uniform with the resources and tools they need. My first question is with regard to the Afghanistan mission. With the mission now moving to a training mission, we will have a large number of soldiers coming home, some with physical injuries and many with psychological ones. Taking care of our ill and injured is perhaps one of the most important tasks our government can do.

Is there money in these estimates dedicated to the physical and mental health care of our CF members who may need it? What kinds of initiatives are in place to help them?

[Peter MacKay, Conservative, Central Nova, NS]

Thank you very much, Ms. Block, for your kind words and for your question.

It is, in my view, the primary responsibility of any government, and certainly our department, to care first and foremost for those men and women who, having chosen it as a profession, willingly put themselves in harm's way as part of the unlimited liability in the job description they take on.

Particularly given the high tempo of operations in Afghanistan, we have seen a necessity to increase both the number of mental health professionals and the amount of direct investment into care for the ill and injured.

You quite rightly point out that the mental health care component of that effort needs to be highlighted. We have undertaken--and I'll come back to the question of the budget--to double the number of mental health care professionals within the employ of the Canadian Forces. As the most direct way to deliver both mental health services and regular health services and to ensure that past and present members of the Canadian Forces and their families are able to access those services, we have set up across the country what are called joint personal support units. These are meant to be locations where members of the Canadian Forces, their families, and veterans can go to streamline the process of accessing programs. They provide information to point them in the right direction and ensure that both regular force members and reservists are getting the care they need. This is a substantial improvement over the way these services were provided in the past.

Given the breadth and width of our country, you can appreciate that providing those services in rural parts of the country is a little more challenging, but these joint personal support units are designed to help ensure ease of access.

We've also invested in areas of new communications--that is, online access to services to help direct people in the right direction as well.

We've made tremendous strides in recent years in the effort to support the families, because we have found that in the past there were shortcomings, particularly around the very basic subjects of stress, deployment-related mental health conditions, and support for the families. We recognize that if we don't have sufficient support for the entire family unit, it will be a failing on our part.

There is always going to be more to do. I'm not suggesting for a moment that we don't still have challenges before us, but we have made improvements. We've appointed a special adviser for operational stress injuries. We have a skilled mental health team fanning out across the country with more clinics and more psychological services. Some of this is done on a per diem basis.

We have looked across the world at how other countries are doing it and have tried to find best practices that we can transplant back home. We've also increased the amount of interaction between the Department of National Defence and Veterans Affairs Canada, because, as you can appreciate, some of our clientele are no longer serving, yet we still owe them very much a debt of responsibility and obligation. We've invested millions in technology, in infrastructure, in new employees, and in other areas that I can define in more detail for you. We are committed to providing the best possible service for the men and women who are providing us with their very best.

[The Chair, NDP, Pat Martin]

You will have to wait for the next question if you want to expand any further, Minister. Thank you.

Next we have, for the NDP, Alexandre Boulerice.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you, Mr. Chair.

Since I have a minute and a half remaining from earlier, I want to take the time to thank the Honorable Peter MacKay and the Honorable Julian Fantino for joining us, despite the short notice.

My question is on the pension plan for army reservists. Prior to 2007, there was no pension plan for reservists, even though those people served our country, made considerable sacrifices and risked their lives. Since then, those who served as reservists in the Canadian Forces have had the opportunity to buy back service.

However, the plan implemented by the department is not well-managed. We have noted an increase in administrative issues, especially in terms of timeframes. Reservists who submit applications don't receive information within a reasonable timeframe. Apparently, sometimes the process takes up to seven years.

In her report, the Auditor General pointed out that only 4% of the 9,213 applications had been processed in March 2010. That percentage is very low and cannot be considered as a very good result. She also emphasized that the investments and administrative actions taken over the last three years had failed to resolve the issue and remedy the situation. Reservists have the right to know what kind of retirement benefits they will be able to receive and when.

Could the minister perhaps tell us what additional resources he intends to make available in order to meet the demands and legitimate needs of reservists who are inquiring about their retirement plan? How do you intend to remedy the situation? Those people have the right to have their application processed within a reasonable timeframe.

[Peter MacKay, Conservative, Central Nova, NS]

Thank you, Mr. Chair.

I also want to thank my colleague. This is a very important question.

You're right. Implementing a new retirement plan for reservists is certainly a big challenge. I'm very proud of the efforts made.

This is the first time that a new pension plan has been introduced by any government in 40 years. You can also appreciate that going back that amount of time naturally presents logistical challenges with respect to record-keeping for a plan that wasn't anticipated. While we take on board the recommendations of the Auditor General and are working extremely hard to meet some of those challenges and those recommendations, we are working within complex administrative issues.

There has been a much higher than expected take-up, for example, on the part of reservists--that is, more have indicated a willingness to enter into the plan, as you have already stated. We are taking steps to improve this current system, including hiring more staff to deal with the backlog and working with other departments, such as national revenue. To give you a practical example, a reservist in one of the rural parts of the country might have been serving with a unit that didn't keep proper records or that put them in an old filing cabinet that is simply missing. We are trying to replicate, in many cases, documents that are 40 years old or that don't exist at all.

The Auditor General's report of this spring has caused us to accelerate our efforts and to concentrate specifically on prioritizing those that are most in need of that pension and on getting their pensions in place. We are improving the current administration of the plan while actively working to implement a modern pension administration. We are also streamlining the business and the systems that are necessary to administer it. We are doing so responsibly and in a way that provides transparency both to the Auditor General and to taxpayers generally. We want to make sure there is integrity behind the system.

I mentioned hiring new individuals, improving the internal controls, reporting and detecting any errors early on, and implementing the long-term plan to modernize the business process. All other recommendations that have been put forward by the Auditor General have been taken in by the department, and we are working to correct any past shortcomings. It is a Herculean effort, to say the least, to try to put this new pension plan in place, given the state of the record-keeping that existed 40 years ago.

I might ask Kevin to add a few words to that.

[The Chair, NDP, Pat Martin]

Unfortunately, it will have to wait until the next question. With a long question and a fairly long answer, the five minutes are gone.

The Conservatives' Scott Armstrong will be next.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Minister, I thank you and Minister Fantino for being here. Congratulations to both of you on your re-election last month.

In the period before we were elected, General Hillier called procurement and support for the military “a decade of darkness”. I think you mentioned in your remarks that since 2006 we've increased the defence budget by $8 billion. I believe a large sum was spent on procurement of new materials: new weapons, new safety devices, and other procurements that support our military.

Has this equipment worked well for the Canadian Forces? Can you provide some examples of how this procurement has actually made our forces safer and helped them to do their job better?

[Peter MacKay, Conservative, Central Nova, NS]

Well, I think I'm going to let Minister Fantino speak perhaps somewhat to the process of procurement.

What I can tell you is that in Afghanistan, for example, we moved with record speed to get the type of equipment that was needed into theatre. Much of that came as a result, members may recall, of recommendations from an independent panel that included John Manley and people like Senator Pamela Wallin and others, and it included some very specific needs that have, I can say unequivocally, saved lives.

It included having aviation assets like Chinook heavy-lift helicopters, and UAV capability, which has given us eyes in the sky over much of the battlefield, as well as improved protection in the theatre of operation. Leopard 2 tanks, for example, have saved innumerable lives. We've never lost a Canadian soldier in a Leopard 2 tank.

Those specific investments were absolutely critical to the mission's success. We were able, through cooperative means and working with other departments, to get those pieces of kit into theatre very quickly.

On the process, I would turn to my colleague, Minister Fantino.

[Julian Fantino, Conservative, Associate Minister of National Defence]

Thank you, Minister, Mr. Chair, and members.

Albeit a new arrival in this particular portfolio, I can say categorically that in every indication I've been able to ascertain, the briefings I received, and my own experience with the Canadian military--and this is in the long term, not just currently--we certainly are fully committed to getting the best equipment for the Canadian Forces. We do that and will continue to do that at the best price for Canadians and of course also with the best benefit to Canadian companies, creating jobs and maintaining the economy.

That's an overarching philosophy. More than that, it's a policy, if you will. Really, if we are asking our men and women to undertake dangerous assignments, and they do so as a commitment to their oath of service and the greater good, I think we owe it to them to do the best we can to provide them with the equipment they need, not only to be effective in the mission they're being asked to accomplish, but also to do that as safely as can be done.

As the minister indicated, we are scanning constantly to ensure that we benchmark a procurement on the basis of the principles I've just highlighted. Of course there's always debate about these issues, but I'm very confident that the integrity of the process is beyond reproach.

We will continue to do that. We'll continue working hard to ensure that our men and women have the best equipment to enable them to do their jobs safely, to ensure that Canadians are assured that their hard-earned tax dollars are spent appropriately, and to ensure that at the same time we provide jobs for Canadians as we go forward.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Thank you.

Minister Fantino, you talked about making sure that our forces have the best equipment available because we owe that to them; it's the least we owe them for the bravery they show for us. What steps, however, have been taken to achieve a fair and open procurement procedure?

[Julian Fantino, Conservative, Vaughan, ON]

A great deal of work has been done. Since 2006 our government has reduced the average time required for military procurement, for instance, from seven years, the norm at that time, to 48 months, which is three full years faster.

That is, of course, reflective of the need to procure the kind of equipment that's necessary to accomplish very complex assignments. That involves, as you know, several departments of the government. It isn't only this ministry that goes forward to deal with those issues. These are all coordinated. It's done in such a way that fairness is always an overarching criteria, certainly, with openness and transparency to ensure that there are no undue influences on the process, to make sure that in essence everyone has a fair opportunity to engage in the process, and to make sure that the checks and balances are there not only within the ministry but also in the external support systems that, depending on cases, validate the integrity of the process beyond just what we and ministry staff are responsible for.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Thank you.

[The Chair, NDP, Pat Martin]

Thank you very much.

For the Liberal Party, John McCallum, please.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for being here.

I would just like to say at the beginning that as a former defence minister, I am of course a huge fan of the men and women of the Canadian Forces.

My questions today are largely financial in nature.

First, it's my understanding that the lapse in the defence budget was over $1 billion in 2009-10 and over $2 billion in 2010-11. I would like to ask the minister if I am correct in those numbers, broadly speaking.

[Peter MacKay, Conservative, Central Nova, NS]

No, you're not correct. In fact last year's lapse was $123.5 million. As I said earlier, it was really an aberration this year based on two main points. One was a helicopter procurement that resulted in our inability to essentially put that money forward in the fiscal year as was intended. The other was simply the high tempo of operations that resulted in certain funds not being used in this fiscal year. I would include in that the shipbuilding and--

[John McCallum, Liberal, Markham—Unionville, ON]

So the lapse in 2011-12 was how much, did you say?