Evidence of meeting #24 for National Defence in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was aircraft.
A recording is available from Parliament.
Conservative
Peter Braid Conservative Kitchener—Waterloo, ON
Are you confident that our companies in Canada can compete with the best in the world?
President and Chief Executive Officer, Aerospace Industries Association of Canada
I believe they've proven that by the fact that we export 80% of what we produce.
Conservative
Liberal
The Vice-Chair Liberal Bryon Wilfert
I thank the witnesses for appearing here today. I thank my colleagues.
We're going to suspend for five minutes before we go into the fourth panel.
Gentlemen, if you have anything you would like to elaborate on and you want to submit anything in writing, feel free to give it to the clerk.
Thank you.
Liberal
The Vice-Chair Liberal Bryon Wilfert
Members of the committee, we are continuing with the national defence committee, meeting number 24, panel four.
For Project Ploughshares, we have Ken Epps, senior program associate, and John Siebert, executive director. And by video conference from Calgary, for the Centre for Military and Strategic Studies, University of Calgary, we have Robert Huebert, who is the associate director.
Gentlemen, the rules are very simple: you have five minutes. That's five minutes for both of you, five minutes for the gentleman on the screen, and then we will go to a first round of seven minutes. All questions and answers are to go through the chair.
Gentlemen, you have the floor.
Mr. Siebert.
John Siebert Executive Director, Project Ploughshares
Thank you, Mr. Chair, for this invitation to Project Ploughshares to address the standing committee on the proposed purchase by Canada of 65 joint strike fighter F-35 aircraft.
In our view, with respect to what has also been heard today, we don't believe the case has yet been made for this acquisition. Given the projected cost and complexity of the JSF program, there has been suprisingly little detail made available on costs, benefits, and, especially, anticipated missions of the aircraft. We'll focus on the strategic environment, and then the affordability, industrial benefits, and opportunity costs of the JSF program.
The Canada First defence strategy released in June 2008 highlights the international circumstances in which security threats emanate to Canada from “failed and failing states, civil wars and global terrorism”. There are also emerging “nuclear-capable adversarial states”, pernicious “Islamist militants in key regions”, and the “buildup of conventional forces in Asia Pacific countries”.
On the domestic front, Canada First identifies possible terrorist attacks, human and drug trafficking, foreign encroachment on Canada’s natural resources, and potential outbreaks of infectious diseases. In our view, you'd be hard pressed to create a credible scenario from these threats where a stealth-enabled fifth-generation jet fighter is logically part of the Canadian Forces response. Canada First also focuses on being a strong, reliable defence partner, and that Canadian Forces remain interoperable with the U.S. military.
We would argue that Canada can be good ally and neighbour without the purchase of the joint strike fighter, and the Canadian Forces do not need them to be interoperable with the U.S. military.
Ken Epps Senior Program Associate, Project Ploughshares
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.
Executive Director, Project Ploughshares
Just to complete these thoughts, Chair, a procurement program that may cost $30 billion over 30 years will inevitably result in opportunity costs, both to equipping the Canadian Forces and to other federal programs that contribute to Canada's and international security. What other investments in the Canadian Forces will be passed over to secure the stealth technology on fighter jets that will seldom, if ever, be used for their primary purpose?
As important, Canadian security preparedness in our view involves more than its military capacity. It includes adequate funding for development, democracy promotion, disarmament, and diplomacy. Currently Canadian government security spending is weighted heavily toward defence, and the JSF program would make this more pronounced. Currently projected expenditures on diplomacy and on development are frozen or being reduced.
During the period before Canada must commit to a JSF order, there should be a thorough and continuing public exploration, as through this parliamentary committee, of the security threats to be met, the costs and benefits, and the consequences of the acquisition of a new generation of fighter aircraft.
Thank you, Chair.
Liberal
The Vice-Chair Liberal Bryon Wilfert
Thank you, gentlemen, for your comments.
Now, by video conference, we have Robert Huebert, associate director, University of Calgary.
Sir, you have five minutes. The floor is yours.
Dr. Robert Huebert Associate Director, Centre for Military and Strategic Studies, University of Calgary
Thank you very much.
I'm going to be limiting myself to three major issue areas. The first one is the need for the F-35s; the second is the competition or the alternatives, as is often being discussed in the media; and the third, a couple of critiques that in fact suggest that the decision to buy the F-35A may not even go far enough, that we may want to be considering buying some of the B variant.
Let me start with the need. One of the biggest challenges we are facing in trying to decipher whether we need an F-35 is, of course, the type of crystal ball that one needs. If we look back to when we made the decisions for the CF-18s, those go back to the mid-1970s, 1978 and 1979, and we still see the CF-18 being utilized in ways that, quite frankly, no one predicted back in the late 1970s. It is expected that the F-35 in the traditional Canadian context will go beyond what we're saying, so we're seeing a possibility of it still being utilized by 2050, even possibly 2060, and of course, that presents all sorts of challenges in terms of trying to predict the future defence needs.
What we have seen in the last 20 years since the end of the Cold War is that air power remains a critical enabler for almost any conflict that occurs. This includes conflicts even of a low intensity such as Afghanistan, but the American dominance of air superiority in this context usually hides from the public view what a critical point it is in being able to have the various airspace, hence battlefield, dominance that is required.
The other issue, of course, is trying to look at who they would be utilized for. From a security perspective, the issue that many people are the most concerned about is the resumed interest by the Russians in their bomber capability. The Russians had stopped all bomber patrols in 1989, but then in August 2007 resumed them, with numbers that are confidential and that the government has not been sharing with the greater Canadian public, but it is rumoured to be higher than what is released on the occasional report of Russian bombers in our airspace. Even more important, however, was the spring announcement by Putin and the head of Tupolev that the Russians are now in the process of designing and hope to deploy by 2017 or 2018 the next-generation stealth long-range bomber. This is not to confuse capabilities with intent, but it suggests that there will be challenges going well into the future.
The other issue in terms of need is that as long as the Russians continue with a bomber capability, regardless of what Canadians think of the intent of the Russian government, the Americans will take it very seriously. If we lose our fighter capabilities with the expected retirement of the CF-18s with no replacements, Canadians will then have to accept that the Americans probably will feel it necessary to do the various air patrols that CF-18s are currently engaged in, creating, of course, sovereignty issues of themselves.
In moving to the issue of the source and contract, one of the greatest challenges we face is that we are seeing a concentration worldwide of who has the capability of making advanced fighters. Currently the options really are the Europeans, who have banded together to create the Eurofighter, but this is an older technology. Some estimates suggest that it probably is not going to be any cheaper than the F-35s, but once again the jury is out in that particular context.
The Super Hornet is considered one option, but once again that is technology going back to the 1990s. The Americans have a congressional law against the export of F-22s. The Swedish V fighters will probably go out of business, because as has been mentioned earlier, all of the other Scandinavian countries are looking at purchasing F-35s rather than going to the Swedish, and it is expected that it probably will be the death knell of the Swedish fighter capability.
That leaves the Russian and Chinese variants of the fighters, and Canada has always had a policy about buying any of its advanced military capabilities from either one of the countries.
In terms of critiques, I would like to offer something that probably goes against most of the critiques and suggest that perhaps Canada is not thinking quite far enough. The variant that we are going to be purchasing is the F-35A. These are basically what the Americans are having to replace their F-16, their air force fighters. They are presumably a very good aircraft in terms of a relatively short airfield, but it is their B variant, the short takeoff and vertical launch, that the Marines are to purchase, that Canada should think about buying, at least a few.
The reason, I would suggest, is that all the predictions are, of course, that Canada will be involved with oversea deployments and with the Arctic opening. The reality is that we probably will find ourselves in a circumstance in the future where having at least a handful of the F-35Bs to be placed on a future naval combatant vessel--probably in terms of a replenishment-sized vessel, one has to acknowledge--might be very useful, with an increasingly ice-free Arctic, in terms of being able to ensure Arctic sovereignty and security and also in terms of any future oversea deployments against any foes we don't know at this point in time.
In conclusion, if we are to be honest with ourselves, within the strategic environment there is no indication that we are seeing a diminishment of the type of security requirements for “fast air”, as the air force likes to refer to it. Nor, unfortunately, do we see any viable competitor. I would argue that perhaps we have not gone far enough in looking at some of the future capabilities we will be needing.
Thank you very much.
Liberal
The Vice-Chair Liberal Bryon Wilfert
Thank you for your comments, and I'm sure you'll receive questions in this first round.
The first round goes to Monsieur LeBlanc for seven minutes.
Liberal
Dominic LeBlanc Liberal Beauséjour, NB
Thank you, Mr. Chair.
Thank you, gentlemen, for your comments and your observations. I think they're very interesting.
Perhaps through you, Mr. Chair, I can ask a brief question, and if there's time remaining, I will give it to my colleague Mr. Simms.
Mr. Epps, you referred to decisions made by, I think you said, Denmark, Norway, and the Netherlands to delay procurement of the F-35. One of the concerns was escalating costs. I think the American general accounting office and American authorities have had some review and some concern about what seem to be fluid costs, not only in terms of the per-unit cost of the plane, the actual initial procurement, but also for the maintenance over the life cycle. You talked about that, and you used figures that are considerably higher than some we've heard at this table today.
I'm wondering if you could expand on that, or share with us other information you have about other countries, or what your concerns might be with respect to escalating costs, both for the initial purchase and with respect to the life cycle of the aircraft.
Senior Program Associate, Project Ploughshares
Yes, I think one of the points to make about the JSF program is that it has been almost universally controversial within all the partner countries that are participating in the program. As you mentioned, in the U.S. alone there's been a lot of debate about the rising costs of the aircraft program, and some doubt as to what the final costs will actually be. The GAO report you mentioned leaves open what the final costs may eventually be.
In terms of the partner countries and the extent to which they have now committed to the program, based on my review of a number of periodicals and industry articles that have referred to the program, we know, for example, the Netherlands, in August of this year, said it will not make a decision on the purchase of the joint strike fighter until after the next election, which is expected in 2014.
Norway has said it will not sign a contract until it is assured that the aircraft will be available at the lowest price, which isn't clearly defined but is presumably lower than what is expected at the moment.
Denmark, in March of this year, delayed its decision on acquisition because of rising costs, and the government there is saying it's waiting for costs to stabilize.
Meanwhile, we also know there's a major defence review going on in the U.K. We don't know the outcome of that review, but The Economist already has suggested, in an article last week, that it might result in the order for JSF aircraft being halved.
In Italy, there are federal budget cuts under way. The suggestion there is that there is a fairly basic commitment to the JSF program, but again the numbers are unknown.
All of that is to say there is still considerable doubt around how the partners are going to be committed to this program.
Liberal
Liberal
Scott Simms Liberal Bonavista—Gander—Grand Falls—Windsor, NL
Let me follow up on that. Certainly this creates quite a bit of apprehension in the whole thing if many of these countries are not going to fulfill their orders.
To the Ploughshares group, I want to ask you about this cost measure again. In your submission, you do say...well, you're quoting a former bureaucrat, estimating that as borne out by a recent GAO report, which noted the JSF program office now estimates life-cycle costs to be $764 billion, and you used $30 billion for this country alone.
Based on your research, then, how does that compare with how we've procured certain aircraft, such as the CF-18, in the past? Did they go through a similar process, and were costs much higher than first anticipated?
I put that question to our friend at the University of Calgary as well.
September 15th, 2010 / 3:10 p.m.
Liberal
Senior Program Associate, Project Ploughshares
Mr. Chair, thank you for that question and the reminder that I didn't answer the earlier question on that.
In terms of past programs, our experience has been that there have been quite a number of them for which initial cost projections have been too low. I don't have the figures for the CF-18 program in front of me, so I don't know the details of that in particular, but certainly there have been others. In the case of what's projected for this particular program, the figures show that what we're hearing from the Department of National Defence is perhaps only part of the picture. Certainly because the acquisition cost is still unknown because of rising production costs, what the final expenditures will be is still somewhat unclear.
The Norwegians have actually tried to cost out in some detail the life-cycle costs. There was a Defense News report in April of this year that said the Norwegian Ministry of Defence estimated the total cost of a 30-year program to purchase and support 48 aircraft at $145 billion kroner. When we work that out in Canadian dollars over an equivalent 30-year program, the cost would be about $34 billion Canadian. So it is significantly higher than the figures we have seen so far.
Associate Director, Centre for Military and Strategic Studies, University of Calgary
Yes, thank you very much.
Almost every single defence expenditure in the modern era will always come in higher than what is expected. In fact, within the open literature this is often the argument that's put forward for signing early. You can never completely keep costs down by getting in early, particularly when dealing with a sole-source provider, but some studies have suggested that if you come in early you will avoid cost escalations. Historically speaking, it is hard to find a single modern program in the western world that has not come in over cost. That tends to be a bit of the nature of the beast.
One other point is that the Norwegians are sending mixed signals. In August of this year, Norway's defence minister met with the head of the American Navy, Admiral Gary Roughead, and signed an agreement to buy anti-ship missiles for the F-35s. So what Mr. Epps said about their stating that they are postponing is somewhat correct, but on the other hand, the Norwegians are also going ahead and actually making purchases to arm the aircraft.
Liberal
The Vice-Chair Liberal Bryon Wilfert
Thank you.
Mr. Bachand, you have the floor for seven minutes. Please, go ahead.
Bloc
Claude Bachand Bloc Saint-Jean, QC
I would like to welcome our guests.
I visited your Project Ploughshares website. I looked at what we might call the six pillars. You are talking about economic equity, political participation, being inclusive, respect for human rights, the integrity of individuals, and a healthy environment. The last two points are particularly important. You are talking about developing peaceful ways to resolve conflicts, as well as reducing and putting strict limits on instruments of war. Could you expand on this last point?
I personally agree with your statement that we should resolve conflict through diplomacy, development and peaceful means. But the lessons we've learned from history encourage us to be cautious. Everyone knows that non-aggression pacts and treaties of friendship between nations have often been broken. When that happens and if we have not taken the necessary precautions, we may have to pay a fairly high political, economic and human price.
If the JSF was not in the picture, would you agree that the Canadian air force had to be modernized so that it had a small reserve in case conflict resolution through diplomacy and development was not successful?
Executive Director, Project Ploughshares
Thank you very much, Chair.
Our approach is that definitely conflicts exist and will continue to exist and that the pursuit of peaceful means of resolution of conflicts is preferable to the resort to violence, and so we talk about the reduction to the resort to violence.
We also believe that Canada, as a wealthy nation with no existing threats to its territorial integrity, has an incredible array of choices about where it might invest to both secure the monitoring of territorial land and waters and also contribute to longer-term investments in international peace and security. We say there should be a military capacity, and that military capacity should be properly equipped for missions that we choose to define and also define how we want to participate in them.
The range of threats, as I've indicated, that even are supported through the Canada First defence strategy, that we are currently facing and foreseeably facing into the future, are of a nature that a joint strike fighter with stealth technology probably will not be used. In fact, some comparisons have already been made in this room throughout the day. The CF-18 came into place, we have this range of possibilities, we couldn't predict them all, and we can't predict into the future. In fact, even at the height of the Cold War, which is a significantly different strategic environment than we are in now, fighter aircraft were rarely used in the full capacity to which they were designed.
So we are a placing a question for this committee. More analysis and public debate should take place: what is the nature of those threats, and is the JSF the place to invest the dollars we have available, which we acknowledge are not unlimited?
Bloc
Claude Bachand Bloc Saint-Jean, QC
Mr. Huebert, I find that the Russians are currently serving the Conservative government well in terms of justifying major contracts, whether in the north or in relation to high-performance planes. Don't you sometimes get the impression that the Canadian government is inclined to depict the Russians as demons, especially since, as far as I know, the Russians have not violated our airspace? They went into the buffer zone, but never into Canadian airspace. It seems that we never miss an opportunity to arm ourselves to the teeth because the Russians are coming. You even brought it up yourself, I think, when their infamous project to build stealth bombers was being discussed.
Doesn't this trigger escalation? By making noises like that, the Russians push the Canadian government to react by saying that it is going to arm itself too. Do you sort of get the impression that we are witnessing military escalation?