Government Operations Committee on March 8th, 2021

[The Chair, Conservative, Robert Gordon Kitchen]

Mr. Clerk.

[Han Dong, Liberal, Don Valley North, ON]

I have a point of order, Chair.

I am under the impression I'm subbing for Irek, who's a permanent member.

[The Chair, Conservative, Robert Gordon Kitchen]

I apologize, Mr. Dong. I was under the impression that Mr. Fragiskatos was that individual, so I apologize for that.

[The Clerk]

Mr. Chair, I'm sorry. I haven't been informed of any substitution today vis-à-vis the Liberal Party. I don't know who's replacing Mr. Kusmierczyk. I haven't been informed by the chief government whip and it is my understanding that this is the protocol pursuant to the order adopted by the House.

I know Mr. Fragiskatos is here. I know Mr. Han Dong is here and Mr. Bezan was here as well, but I haven't been informed officially by the Liberal Party as to who is actually replacing Mr. Kusmierczyk, which is why I didn't call either Mr. Dong or Mr. Fragiskatos.

I would appreciate some clarity if there is somebody who's actually replacing him, but I haven't been informed of this.

I think Mr. Fragiskatos would like to intervene, Mr. Chair.

[The Chair, Conservative, Robert Gordon Kitchen]

Mr. Fragiskatos.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Chair.

Colleagues, I was here from 4:30 to 5:30 for Mr. Kusmierczyk, not realizing that Mr. Dong had apparently been here for Mr. Kusmierczyk as well. I leave it with the committee. I don't know what time the motion was put forward but, on my honour, if it was prior to 5:30 I was here and prepared to vote.

[The Chair, Conservative, Robert Gordon Kitchen]

We're going to suspend for a second. I need to talk with the clerk.

[The Chair, Conservative, Robert Gordon Kitchen]

The clerk has not been notified of any replacement at this point, and therefore neither Mr. Dong nor Mr. Fragiskatos is eligible to vote at this point.

With that said, Mr. Clerk, I believe you've gone through the roll. Is that correct?

[The Clerk]

Yes, Mr. Chair. I've called on all the members who are present.

(Motion agreed to: yeas 5; nays 4)

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you.

Mr. Paul-Hus, your time is finished.

I want to thank the Parliamentary Budget Officer as well as your staff for bearing with us during this time. I appreciate that.

We will finish up with Mr. MacKinnon for five more minutes.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you, Mr. Chair.

Mr. Giroux, I apologize on behalf of my Conservative colleagues for that little spectacle.

On numerous occasions today, you have referred to the Department of National Defence estimates. In response to Mrs. Vignola, I would argue that economies of scale can be achieved when you build a single ship in a yard.

In line with Canada's national shipbuilding strategy, we are interested in opening a third shipyard and we are currently negotiating with Chantier Davie in Lévis to do so.

Your report clearly demonstrates that delays bring added costs. If we want to build new capacity for the Canadian Coast Guard or the Navy, we really have to start building ships at multiple sites, including the shipyards in Vancouver and Halifax. We will also have a third shipyard, where we want to build icebreakers, among other things.

To come back to the vessel in question, the Navy has found that combining capabilities on one type of ship, rather than building two types, is the best way to achieve economies of scale. In addition, the versatility of such ships would allow Canada to meet a wide range of needs, such as drug interdiction, participation in commitments to the North Atlantic Treaty Organization, NATO, patrols or even humanitarian missions in the Caribbean or elsewhere in the world. Ships like this will help us to do all of those things while also realizing economies of scale.

In your opinion, is it reasonable to combine all these capabilities on one ship? Economies of scale could also be achieved by building a long series of 15 similar, if not identical, vessels.

[Yves Giroux]

There's no doubt that building one type of vessel would result in economies of scale. We took it into account in our report. When we included the economies of scale associated with building these ships, we arrived at a cost estimate of $77 billion. If we had a hybrid fleet, we would lose construction-related economies of scale, and we would arrive at the cost of a hybrid fleet, as mentioned in the report.

We did not consider the operating and maintenance costs associated with this fleet of vessels, regardless of the design type chosen. We focused on development and acquisition costs.

[Steven MacKinnon, Liberal, Gatineau, QC]

So the Department of National Defence's estimate is not unreasonable. Isn't that right?

[Yves Giroux]

Having only one type of vessel obviously produces economies of scale. We factored that into our cost estimates for construction and acquisition. However, operating and maintenance costs are not part of the report.

[Steven MacKinnon, Liberal, Gatineau, QC]

Do you have any comment on Mr. Paul-Hus's assertion that the project is costing a fortune?

That statement is somewhat ironic, given the earlier estimate of $26 billion, don't you think?

[Yves Giroux]

I have nothing to add, other than the fact that the costs are considerably higher than originally estimated.

[Steven MacKinnon, Liberal, Gatineau, QC]

Are the costs really higher or have they been revised upwards as a result of a flawed assessment by past governments?

[Yves Giroux]

I did not consider the circumstances under which the original estimates were made. Therefore, I cannot determine whether the estimates are flawed or whether the estimates were accurate at the time, but that the costs have increased as a result of changes to the specifications.

We know that the specifications required by the Royal Canadian Navy have changed over time, but I am not in a position to review the history of the project and perform an autopsy, if I may put it that way, on how costs evolved.

[Steven MacKinnon, Liberal, Gatineau, QC]

However, for all the projects reviewed under the national shipbuilding strategy, cost estimates for all of the vessels had to be systematically revised upward. Isn't that right?

[Yves Giroux]

That is certainly the case for the surface combatants and the support or supply ships. Those are the two studies I can comment on, because I was in office when they were done.

[Steven MacKinnon, Liberal, Gatineau, QC]

That's right. You are therefore speaking from experience.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. MacKinnon.

Mr. Giroux, I would like to thank you, Ms. Malanik and Mr. Penney for coming, for bearing with us, and for your succinct and very informative answers. Once again, every time we've asked you to show up, you do so so willingly and quickly. Thank you very much, we appreciate that.

With that said, to the committee, we were going to go into an in camera meeting, but due to the timing, we cannot. Unfortunately, the interpreters have to be at another meeting very soon.

I'm going to have the clerk very quickly mention to you what our schedule is for the next little while. You are aware that we had talked about getting a calendar, Ms. Vignola had asked for that, so we are going to get that set up as soon as possible.

I can tell you that on the issue of the Nuctech study, we should have a first draft of that hopefully by early in April, such that you can have a chance to look at that, and then we can respond to that.

I'm going to turn it over to the clerk to briefly tell you what our next couple of meetings are about.

[The Clerk]

Thank you, Mr. Chair.

What we have planned at the moment is that on Wednesday, March 10, the President of the Treasury Board will appear before the committee to discuss the supplementary estimates (C) and the departmental plans as well.

For our next sitting on March 22, the chair has, as part of the committee's study on the government response to the COVID-19 pandemic, instructed me to invite members of the Public Health Agency of Canada and PSPC senior officials to discuss the national emergency strategic stockpile.

The Minister of Public Services and Procurement has agreed to appear before the committee on March 24. As I explained at a previous meeting, the order of reference will have lapsed to study the supplementary estimates, however, the committee can still hear from the minister on a subject matter study, if it wishes.

The next meeting will be in the week of April 12. There had been some discussion with the chair about the possibility of taking up the Nuctech report at that time as we anticipate that report will be distributed to the committee members in early April. We hope to make sure that the committee members have at least a week to review it before the consideration begins.

As part of the committee's study on the government response to the COVID-19 pandemic, the Minister of PSPC has agreed to appear to discuss the issues related to that on Wednesday, April 14. I raised this issue with the chair, who was planning to raise it with the committee today.

That is all the information I have currently, Mr. Chair.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Clerk.

Ms. Vignola, do you have a question?

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Yes, Mr. Chair, I will be brief.

Since we will not be debating motions on the record in camera now, I was wondering when we would do that.