Government Operations Committee on Feb. 15th, 2022

[The Chair (Mr. Robert Kitchen (Souris—Moose Mountain, CPC)), Conservative, Robert Gordon Kitchen]

I call the meeting to order.

Welcome to meeting number six of the House of Commons Standing Committee on Government Operations and Estimates.

Today we will hear from the representatives of the Office of the Auditor General as part of the committee's study of air defence procurement projects and national shipbuilding strategy.

Today's meeting is taking place in a hybrid format pursuant to the House order of November 25, 2021. Members are attending in person in the room and remotely using the Zoom application. Regarding the speaking list, the committee clerk and I will do the best we can to maintain a consolidated order of speaking for all members whether participating virtually or in person. I'd like to take this opportunity to remind all participants in this meeting that screenshots, or taking photos of your screen, is not permitted.

Given the ongoing pandemic situation, and in light of the recommendations from public health authorities as well as the directive of the Board of Internal Economy on October 19, 2021, to remain healthy and safe, the following are recommended for all those attending the meeting in person.

Anyone with symptoms should participate by Zoom and not attend the meeting in person. Everyone must maintain two metre physical distancing, whether seated or standing. Everyone must wear a non-medical mask when circulating in the room. It is recommended in the strongest possible terms that members wear their masks at all times, including when seated. Non-medical masks, which provide better clarity than cloth masks, are available in the room. Everyone present must maintain proper hand hygiene by using the hand sanitizer at the room entrance. Committee rooms are cleaned before and after each meeting. To maintain this, everyone is encouraged to clean surfaces such as the desk, chair, and microphone with the provided disinfectant wipes, when vacating or taking a seat. As the chair, I will be enforcing these measures for the duration of the meeting, and I thank members in advance for your co-operation.

I would now invite the representatives of the Office of the Auditor General to make their opening statements.

[Andrew Hayes, Deputy Auditor General, Office of the Auditor General]

Mr. Chair, thank you for this opportunity to discuss our fall 2018 report on Canada's fighter force and our report on the national shipbuilding strategy, which was tabled in the House of Commons in February 2021.

I would like to acknowledge that this hearing is taking place on the traditional unceded territory of the Algonquin Anishinabe people.

Joining me today is Nicholas Swales, the principal who is responsible for the audit of the national shipbuilding strategy.

I would like to start with our fall 2018 audit of Canada's fighter force. This audit examined whether National Defence managed risks to the fighter force so that it could meet Canada's commitments to NORAD and NATO until a replacement fleet is operational.

In 2016, the Government of Canada directed National Defence to have enough fighter aircraft available every day to meet the highest NORAD alert level and Canada's NATO commitment at the same time. This meant that National Defence had to increase the number of fighter aircraft available for operations by 23%. This new requirement came at a time when the Royal Canadian Air Force faced a growing shortage of trained and experienced pilots and technicians.

To meet the new requirement, the government purchased used fighter jets from Australia as an interim solution to bridge the gap until it could roll out a replacement fleet. The Australian jets are about 30 years old and have the same operational limitations as Canada's current fleet of CF-18 aircraft.

National Defence expected to spend almost $3 billion to extend the life of its fleet and to buy and operate the Australian jets. However, since the department did not have a plan to deal with its biggest obstacles—a shortage of experienced pilots and the CF-18s' declining combat capability—these spending decisions would not have been enough to ensure that the air force had available on a daily basis the number of aircraft needed to meet the highest NORAD alert level and Canada's NATO commitment at the same time.

We noted that more aircraft would not solve National Defence's problems unless the department knew how and by when it could solve the pilot shortages and improve combat capability.

We made two recommendations in our report, and National Defence agreed with both.

Let's turn now to our audit of the national shipbuilding strategy. This audit provided an opportunity to examine a complex program in its early stages, once the procurement process was completed.

The Royal Canadian Navy and the Canadian Coast Guard operate fleets of large vessels to support Canada's participation in security operations around the world, to support Marine science, and to ensure that Canada's waterways are safe and accessible. This audit examined whether these vessels were being renewed in a timely manner.

Timely renewal is important because of the need to replace aging fleets and introduce new capabilities. In 2010, the government launched the national shipbuilding strategy with the goals of renewing these fleets in a timely and affordable manner, of creating and supporting a sustainable marine sector in Canada, and of generating economic benefits for Canada. The strategy also calls for the building of at least 50 large science and defence vessels over about 30 years.

Overall, we found that during our audit period, the national shipbuilding strategy was slow to deliver the combat and non-combat ships that Canada needs to meet its domestic and international obligations for science and defence. The delivery of many ships had been significantly delayed. Further delays could result in several ships being retired before their replacements are operational.

National Defence, Fisheries and Oceans Canada, Public Services and Procurement Canada, and Innovation, Science and Economic Development Canada reacted to these delays. However, we are still concerned that the strategy has been slow to deliver. Considering the impact of the COVID‑19 pandemic on work in departments and shipyards, and with the bulk of new ships yet to be built, departments need to look for opportunities to improve how they manage risks and contingencies.

Public Services and Procurement Canada, National Defence, and Fisheries and Oceans Canada agreed with the three recommendations we made in this report. Both of these audits underscore the importance of renewing fleets in a timely manner to avoid capability gaps that could jeopardize the ability of Canada to deliver on its national and international defence and science commitments.

Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have.

Thank you.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Hayes.

We will start our first round with Mr. Paul-Hus for six minutes.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Chair.

Good afternoon, Mr. Hayes. Thank you for being here.

In your report, you talk about there being no plan. National Defence had planned to spend $3 billion, and you do say that there was no plan. The key elements in the report included the shortage of pilots and the CF‑18 fighters' declining combat capabilities. The department responded to you and gave you a plan, but then you said that the pilot shortage issue had yet to be resolved.

Four years later, have you seen any changes made on these issues?

[Andrew Hayes]

Thank you for the question.

The department responded to our recommendation to recruit pilots, but we don't have recent information about what steps they have taken and how much progress they have made.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

All right.

Four years ago, I took part in the debates when the government said there was a capability gap and they planned to buy 10 Super Hornet fighter jets. However, we already knew that the CF‑18s were short pilots. The Super Hornet is a totally different aircraft. Pressure was applied and small issues arose in connection with Boeing. The government then decided to purchase second-hand Australian aircraft. Thirteen former Air Force commanders then said the whole thing was stupid.

As Auditor General, did you find the government's decision to buy aircraft more political than operational, given the shortage of pilots and technicians to handle what we already had?

[Andrew Hayes]

We found that there was a shortage of pilots and technicians. In the report, we pointed out that only 64% of pilots were qualified. This meant that they are short a great number of pilots. Canada is therefore having a hard time meeting its operational requirements with regard to the North American Aerospace Defence Command, or NORAD, and the North Atlantic Treaty Organization, or NATO.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

The Air Force's capacity was waning in 2018 due to the shortage of pilots. Currently, given our commitment to NATO, do you believe we would be completely out of the loop if we had to support an ally such as Ukraine, for example?

[Andrew Hayes]

I would ask Mr. Swales to answer this question.

[Nicholas Swales, Principal, Office of the Auditor General]

Thank you.

The issue is a potential increase in demand for Air Force fighters and possibly having to provide fighters for NORAD and NATO at the same time. The context could depend very much on the circumstances.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Let's come back to the pilot issue. We have two issues right now. First, it's taking too long to purchase new aircraft. It gets put off year after year. We've ended up with old Australian aircraft for which we do not even have any pilots. Also, it seems nothing has been done to address the shortage of pilots.

During your investigation, did you find people had no interest in a career as a fighter pilot in Canada? Did any young Canadians tell you they had no intention of flying old fighter jets in Canada because they didn't feel it was worth it and they didn't want their career as a pilot to be limited to old aircraft?

[Andrew Hayes]

I believe recruitment is an issue for the department. Recruitment is a real challenge for the Canadian Forces.

In addition, they do face other issues, including the number of older aircraft that require added maintenance.

A few years ago, we did an audit on recruitment in the Canadian Forces.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Did the audit reveal that the lack of interest could be attributed to the equipment being too old?

[Andrew Hayes]

The audit didn't cover equipment or capabilities per se, but we did note that the Canadian Forces needed to do something about recruitment.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Three billion dollars has been announced with no mention of planning, in the midst of a pilot shortage.

Could that be considered a waste of money or was there a credible basis to justify that amount?

[Andrew Hayes]

That amount takes into account the reality of maintaining an aging fleet, as well as the cost of purchasing Australian aircraft. It's a lot of money, yes, but there are reasons for that. However, as you said, no planning was done as a result of our audit.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you.

[The Chair, Conservative, Robert Gordon Kitchen]

We will now go to Mr. Housefather for six minutes.

[Anthony Housefather, Liberal, Mount Royal, QC]

Thank you so much.

First of all, thank you so much for both reports. They're very illuminating and helpful. Thanks for your work on them. I'm glad to see that your recommendations were considered.

Can I ask a question? You just talked about no plan. I believe you had done an audit in 2012 related to replacing Canada's fighter jets. What was found in that audit? How did that affect the current strategy of replacing fighter jets? Was there a plan at that time?

[Andrew Hayes]

I might ask Mr. Swales to add to my answer.

The 2012 audit did focus on the purchasing of the fighter jets. The 2018 audit did not.

In the 2018 audit, we were looking at the readiness or the ability of the forces to meet the NORAD and NATO requirements, but in 2012 our scope was a bit different. I know that there were concerns about management, about the assessment of risks and about costing, but Mr. Swales might be able to add to that.

[Nicholas Swales]

The report in 2012 didn't look at the question of personnel, so the issue that was raised in 2018 wasn't examined in that report. That report was really about some of the questions around the transparency and the process for acquiring the new aircraft. At that time, there were some fairly different time scales being considered as well.

[Anthony Housefather, Liberal, Mount Royal, QC]

Thank you. I guess what I'm trying to say is that the issues you uncovered in 2018 may very well have existed back in 2012 as well. They are not necessarily new issues.

I understand also.... The issue that you raise in your report is an interesting one, and I'd like to just question you further on that. In paragraph 3.52—and now I'm talking about the jets—you conclude that the additional operational requirements needing to conform to the highest level of NORAD requirements as well as NATO commitments put National Defence in a “difficult” position until the replacement fighter jets are in place.

But can I just understand, based on our NORAD commitments and our NATO commitments, are the new requirements not sensible? If we have obligations in both cases to meet certain norms and NORAD was at its highest level of alert, don't we need to be able to meet the highest NORAD level of commitment plus the NATO one?

[Andrew Hayes]

I don't think that we are in a position to comment on the policy decisions of the government. I do think that, obviously, when you look at a given point in time, the factors of what is reasonable and what might be a challenge for the departments or the forces to respond to might be different.

As we mentioned in the report, historically—I guess before 2016—the focus was on meeting the NORAD requirement, and in 2016 that changed. Our point in the report was that it is not only about acquiring additional fighter jets. You also have to have a plan for having the technicians and the pilots to operate the fleet.

[Anthony Housefather, Liberal, Mount Royal, QC]

I agree. I agree completely. I don't think that I'm trying to dismiss what you said. I think it's important. We may have had these lacunes, as we would say, for a long time. I think it's important to know that we need to do better in terms of that.

What I was basically saying, though, is that my understanding is that we would be in breach of our agreements if we didn't actually meet the newer levels that were talked about, because we have to be able to meet the highest NORAD level and also fulfill our NATO commitments.

Mr. Chair, do I have any time left?

[The Chair, Conservative, Robert Gordon Kitchen]

You have a minute and 55 seconds.