National Defence Committee on Dec. 1st, 2011

[Kevin Lindsey]

The government would first look to DND to fund that cost overrun from within its approved reference levels. DND would have to demonstrate with absolute clarity that it was unable to shift its priorities to cash-manage a cost increase to a particular project. We do not—certainly on my watch, we have not—come in looking for supplementary estimates to fund cost increases for projects.

Wherever there is a new federal initiative, such as the federally contaminated sites action plan, which is funded on a horizontal basis, we come in and we ask for a supplementary estimate. We have not and we do not ask for supplementary estimates to fund the cost increases associated with projects. I suspect we would not get support to do that from Treasury Board Secretariat or the Department of Finance.

[Tarik Brahmi, NDP, Saint-Jean, QC]

I would like to talk about something else. In my constituency of Saint-Jean, rumours are currently going around about job cuts or the downsizing of military bases. Those rumours include the military base in Saint-Jean. Every time this question comes up in question period, the minister says that there is no such plan and that we should not worry.

Now that we have the senior officials here with us, could they go through the budget lines and compare the previous estimates with this year's estimates in order to show us that there is actually no plan to kill jobs or to entirely shut down bases or parts of military bases?

[The Chair, Conservative, James Bezan]

Again, there's the matter of the relevance of this to the supplementary estimates (B), and also the role of public servants and the responsibility they have to ministers and for future financial transactions. I'll leave it up to the witnesses to determine how they want to handle that question.

[Robert Fonberg]

Let me just say a couple of things. First of all, we won't answer questions based on rumour, obviously. I don't think, Mr. Chair, that members would expect us to do so. I don't know that the vice-chief would want to take a question, particularly a question on St. Jean.

On the issue of jobs and bases, I think it's well understood by everybody that as we go through a period of fiscal restraint to deliver on the government's commitment to reduce its budget deficit by, I guess, it's now 2015-16, all departments have, through the course of the strategic review over the last few years, and now through the course of the deficit reduction action plan, been working—

[Tarik Brahmi, NDP, Saint-Jean, QC]

Okay, but can you point to a specific line in the estimates where it clearly says that no cuts have been planned?

[Robert Fonberg]

No. The answer is no, there's no line in these supplementary estimates that I could point to in answer to that question, Mr. Chairman.

[The Chair, Conservative, James Bezan]

The time has expired.

Unless, Vice Admiral, you have anything to add, we'll move on.

Mr. Norlock, you have the floor.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Thank you very much, Mr. Chair, and through you to the witnesses, thank you for appearing.

This is probably best addressed by the vice admiral.

Vice Admiral, with regard to weapon systems and capabilities of either our current aircraft or proposed aircraft, do we share that information publicly with any other nation or entity?

Do we share the full capabilities of our aircraft? Is it a matter of public knowledge, or is it a case that some of it would be confidential?

[VAdm Bruce Donaldson]

Mr. Chair, the full capabilities of any of our weapon systems are classified confidential or more. When you look at aircraft in particular, the full capabilities can be as high as top secret.

Having said that, there are mechanisms for sharing information with our allies—and, in fact, necessarily with our allied militaries. We must understand the capabilities of weapon systems in a coalition environment.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Admiral, would I take it from that response, then, that when Minister Fantino mentioned apples and oranges, he was probably referring to each nation not necessarily sharing the full capabilities of its aircraft, and therefore to our having no way of accurately measuring the costs vis-à-vis their requirements of and orders to the producing company?

[VAdm Bruce Donaldson]

In certain respects, I would expect, not only from a military capability standpoint but also from a commercial proprietary standpoint, that they would not share elements of this with us. In other respects, it is a common aircraft being purchased by allies, and to that extent there is sharing of the information.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Thank you very much, Vice Admiral. Since the chair is giving some latitude, that leads me to the second part of the question.

When we toured CFB Trenton with Minister Fantino, we did look at our aircraft. The Royal Canadian Air Force personnel explained to us that what we have done, especially when we purchased the new Hercules—what I call the second phase of the Hercules—was to purchase it with equipment that was relatively common to that of our allies, and for one specific reason, which leads me to a second question.

When we need to repair or replace certain items on these aircraft that so many nations buy—and I'm referring to Australia and other countries that are buying the aircraft—there is a savings to be found. If you customize the aircraft, which the aircraft manufacturer love, then you can get soaked, to use the common phrase, when you have to get these planes repaired.

This question is perhaps to the vice admiral, or the deputy ministers.

Do we do a comparison of the savings? In other words, can you go to the minister, the government, or the public at large and say, “Do you know what we saved?” In the real world, with regard to Mr. Valeriote's question, you want to compare savings as opposed to talking about customization: “We like this, but we're going to buy that, and doing so saves us such-and-such.”

Do you do this, and is it reflected in reports to Parliament, such as supplementary estimates or budget items?

[Dan Ross]

Thank you for the question, Mr. Chair.

What you're referring to is actually common to a number of our fleets. The process involves joint user groups, normally within NATO. What we do deliberately is to minimize the customization and Canadianization.... The members of the joint user groups share modification costs—in many cases, it's the software upgrade costs—amongst all the participants.

The second part of your question was whether or not we know exactly what we save. We don't know specifically what we would have paid for a change to the aircraft when we initially buy it, because we do not negotiate that different price. We're not interested in that different capability, so we don't negotiate that. Over time we could make approximations of what our interim support savings would be, but again, compared to what? Making comparisons to something you didn't do makes it fairly difficult.

Lastly, we don't report those speculative estimates to Parliament. We don't.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Thank you very much.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Christopherson.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Chair.

And thank you to our witnesses for their answers.

I want to stay with the last issue. I am having some difficulty reconciling the questions with the answers.

I'm looking at table 7, on page 45 of the public accounts. I'm looking at “Used in the current year”, $20,309,812,000. Under “Lapsed”, let's call it $2.4 billion. I'm also looking at “Available for use in subsequent years”, at $10.9. Is the latter your eligible carryover of that amount. Correct?

[Kevin Lindsey]

Unfortunately, Mr. Chair, I don't have a copy of the public accounts with me.

Off the top of my head, the $10.9 billion does not ring a bell. Our carry forward embedded in the “Lapsed” is actually about $443 million. But I'm sorry, sir, the $10.9 billion just doesn't ring a bell.

[David Christopherson, NDP, Hamilton Centre, ON]

Okay, well perhaps you can take a look at that. The minister offered to provide later responses to unanswered questions.

But let's use the numbers you've thrown out. During your answers, I believe you gave us amounts that would cover some of that to the tune of.... What was your figure, $450 million? It's still left—

[Kevin Lindsey]

No, $950 million was left.

[David Christopherson, NDP, Hamilton Centre, ON]

Right. Now that figure is still three times larger than the Auditor General criticized your department for a couple of years ago. So I'm having trouble understanding the comment that you're making improvements. I look at the numbers and I see your losing ground, particularly two years after the Auditor General pointed this out as a problem.

The department promised they would do something about this. Please help me reconcile these numbers with your statements.

[Kevin Lindsey]

Thank you.

Mr. Chair, I don't think you can judge the performance based on one year's data. Clearly 2010-11 was an anomalous year, and $950 million, a very large number. I've attempted to explain what drove that number. When we look at the seven-year history going back to 2004-05, including the 2010-11 fiscal year, which was anomalous, our total lapse was $1.4 billion on spending authorities of about $118 billion. That's 1.2%.

I would be surprised, frankly, if anybody could show me an organization in this country that manages to within a percentage point and a half of their budget, given the tremendous uncertainties in the environment in which DND operates.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you very much.

When we were in the public accounts committee on this very chapter—you were deputy minister at the time, and you and I were both there—the following is a quote from you at that meeting: “But the first thing I would say is that the lapse in 2007-08, I believe was essentially”—now wait for it—“an anomaly. I believe there was one other time in recent history when we actually lapsed anything...”.

So we've heard this before. I would like to ask the deputy to give us a clear statement that in his opinion he has honoured the commitment his department made to the Auditor General, and a clear statement that in his opinion they are better at managing lapsed amounts found in the results of the 2009 public accounts.

Please make that statement straight out that you believe you have a better grip on it and that you're improving things.

From the deputy, please.

[Robert Fonberg]

Well, Mr. Chairman, I'm happy to make that statement. We have taken into account virtually all of what the Auditor General had to say and we have indeed improved. I think, as the CFO has tried to explain, a number of events last year drove us into the lapse situation that we had—some well beyond our control. And in fact—

[David Christopherson, NDP, Hamilton Centre, ON]

With respect, that's was what was said in 2009 when we held the hearing—that it was an anomaly. We're hearing the same language. We were looking at $300 million when the Auditor General said you had a problem and that this was unacceptable. Now the number is $950 million and you're sitting there telling us that things are getting better. I don't see how.

[Robert Fonberg]

I have just two other quick points to make, Mr. Chairman.

One was the work of the public accounts committee, at that time, actually--