Mr. Chair, the government has emphasized the affordability of the F-35 aircraft. However, U.S. government sources now cite the per-unit cost of the JSF at close to twice the initial projected price.
Denmark, Norway, and the Netherlands have postponed their F-35 procurement decisions until the rising production costs stabilize or are guaranteed. The projected life-cycle costs for the Canadian F-35 aircraft, essentially the costs of operation and maintenance, have not been made public by the Department of National Defence. A former senior Canadian defence procurement official has stated these costs may be two to three times the $9 billion cost of acquisition. A report in The Globe and Mail based on government documents placed life-cycle costs at $17 billion, meaning the total program outlay over 20 years would be almost $26 billion.
These figures support our estimate, using U.S. government studies, that the Canadian JSF program costs could total $30 billion over 30 years. Surely these figures redefine the meaning of affordability.
The Canadian military aerospace industry has fared well in winning program subcontracts, yet future Canadian industrial benefits face two major risks.
The first is that the projected global market for F-35 aircraft will continue to shrink. Initial global projections have already been revised downward from a high of 6,000 aircraft to the current 3,200.
The second risk is the changing nature of U.S. military trade relationships with JSF program partners. For decades, Canada has had a unique military trade relationship with the U.S., easing access of the Canadian military industry to the U.S. military market. However, recently announced changes to U.S. export controls, combined with growing pressure from JSF partner governments to ensure subcontracts for their industries, will likely alter the comparative advantage the Canadian industry has enjoyed in the U.S. market to date. The terms of the JSF partnership agreements, as they now stand, do not obligate U.S. prime contractor Lockheed Martin to guarantee subcontracts to Canadian industry.