National Defence Committee on Feb. 7th, 2017

[Dr. James Boutilier]

As I see it, the maritime realm is where a good many interstate frictions are going to play out over the next quarter of a century. Then it comes to the theological issue of how many ships do you need to execute your responsibilities in terms of power projection and so forth? Currently, I think we are looking at 15 surface combatants, down from an original 16, which was the 12 frigates plus four destroyers. My anxiety, speaking personally, is that frankly we are going to run out of money long before we get to 15. We'll see.

Various models have suggested that you should be looking really more at 18 or 19 surface vessels, in terms of the cycle in training and repair and so on, to have enough vessels to project your presence in the region.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Okay.

The administration in the United States has indicated that in order for them....

Are those bells, Mr. Chair?

[The Chair, Liberal, Stephen Fuhr]

Is that the new way they do it? I have never seen that.

Please continue, Madam Gallant, while I find out whether or not that's a bell.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Okay.

The administration in the U.S. has indicated that they will only continue participating at the level they are in NATO if the other countries pull their weight. In order for Canada to be pulling its weight, we'd almost have to double our spending in defence, and you just said that we were probably going to run out of money before we met our goals with the national shipbuilding strategy.

I'd like to hear your thoughts, Dr. Perry, on whether or not we would be able to achieve what is being set out for us in terms of full funding requirements in NATO.

[David Perry]

If we were to meet it today, we'd need about another $21 billion at the start of the next fiscal year. It's up to the politicians in the room to determine whether or not there's $21 billion, whether or not it's borrowed or taxed or whatever, in the fiscal framework to fund that. But that's the level of additional spending that would be required for us to hit our 2% of GDP target on April 1.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

But you also say, Dr. Perry, that we leave billions of dollars unspent every year in procurement, so would we not have any left over from there? Then I'll go to Dr. Boutilier.

[David Perry]

That changes the amount a little bit. That's why I say that it depends on whether or not, when you talk about these shares of GDP, it's money actually spent or money allocated. If we were actually able to execute what's in the fiscal framework right now, that would push spending $1 billion or $2 billion a year higher, so that would move us about another 0.1% toward the 2% target, give or take. That would certainly help get to the overall number, but it wouldn't come anywhere close to totally closing the gap.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Okay.

Dr. Boutilier, please.

[Dr. James Boutilier]

The Australian experience is well worth examining, I believe, in the sense that they're now heading toward 2% in the largest recapitalization of its armed forces since 1945. Whether this is necessarily the Canadian model remains to be seen, but it demonstrates that it's doable.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

And Dr. Sokolsky—

[The Chair, Liberal, Stephen Fuhr]

I believe that's the end of your time, Ms. Gallant.

I'm going to give the floor over to Mr. Garrison.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

Thank you very much, Mr. Chair.

I guess I'll start by—I don't know what to call it—“musing” a bit. This committee had set its own goal of producing a report on our maritime readiness by December so we could feed into the defence review. We've missed our own deadline on that. The defence review isn't going to be finished until after the budget, or released until after the budget. The budget is clearly in its final phases, so the defence review has missed the budget. The concern I'm musing about here is that actual events are running way ahead of our ability to influence them from this committee, from the kind of testimony that you are giving.

What is the critical thing that needs to happen, in the absence of the defence review and in the absence of our report getting in, or what's the critical thing we need to either watch for or expect the government to do in the next few months with regard to our naval readiness?

I'll start with Mr. Perry.

[David Perry]

I would say it's the money. In the long term, if there isn't more money, the navy is going to lose capability and lose readiness over time. If there's more money, then it's a question of how it gets spent and what that's actually directed toward. Depending on the allocation, the navy could benefit more than some of the other services. Without increased funding, the government will not be able to do the same things in the future that it does today.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

When you say increased funding right now, do you mean beyond what's in the fiscal framework?

[David Perry]

Yes.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

So it's beyond what's in the fiscal framework.

[David Perry]

Yes.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

Okay.

Mr. Byers.

[Dr. Michael Byers]

I actually disagree with that. You have two umbrella agreements, with Seaspan and Irving, and although not all the contracts are signed, those are pretty firm plans. So it's not a question about getting more money, it's about fulfilling those plans as quickly as possible, and doing so in the most efficient way, to actually deliver vessels that two governments in a row here have promised to the Royal Canadian Navy.

My suggestions were directed at that. Having made the decision with regard to the Canadian surface combatants to buy an off-the-shelf design, stick with that plan. Do not let industrial lobbies in Canada take you in a different direction. That's how you get ships fast. That's how you get money out the door. And that in turn, as David did explain, will boost current defence spending slightly, which helps to answer critics in other NATO countries.

With regard to the joint support ships and fulfilling that essential capacity to be able to refuel our frigates at sea, the correct decision was made in contracting Davie to convert a single container ship to a temporary tanker. I'm suggesting that you should do that one more time with Davie and then flip the order of the procurement on the west coast so that you get the polar icebreaker first. Those are concrete suggestions that fit within the existing plans.

The navy doesn't need more money. You just need to get these procurements happening quickly. Every delay pushes up the cost, because the inflation in shipbuilding is so very high, and it just runs and runs and runs. You end up with a navy that can't do very much. You can't send out a task force right now. The submarines are 30 years old. There are some very serious problems with the Royal Canadian Navy. We have 12 beautiful, very capable, refitted frigates. That's our navy right now. Our marine coastal defence vehicles were deemed unworthy of a mid-life refit, and they can only sail 15 knots. We do not have a world-class navy. We have 12 frigates, and we need to fill in all the gaps around them as quickly as possible.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

Dr. Boutilier.

[Dr. James Boutilier]

I would certainly come back to my original assertion, and it keys on what has already been said, that there's a need for dramatic urgency, in my estimation. I also think there's a need for more money. As Michael has quite rightly pointed out, defence inflation is probably 4% or 5% per annum.

I remember standing on a jetty in the bright August sun in 2007, when the Prime Minister was 10 feet away saying we're going to use it or lose it, and I'm going to have six to eight AOPS. Well, 10 years later, we're now beginning to move the modules for ship one into place.

We simply can't operate at that pace. Literally, the money in the imaginary pot in the sky is evaporating at an astonishing rate. I would emphasize the necessity for real urgency, because in the final analysis we're not being prudent. We're not saving the public the money that we say we're saving them. It's going to cost more.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

Dr. Sokolsky.

[Dr. Joel Sokolsky]

Unless one believes, then, that the defence review is going to significantly alter the traditional Canadian roles of NATO, contributing to international coalitions, domestic operations, and North American security, we will simply fit the navy we have into those obligations and make the contributions.

I agree with Michael Byers that they should go ahead with the shipbuilding project. We don't know whether there's going to be a new emphasis on maritime security, as envisioned in the 2006 NORAD renewal, so there may be more obligations in North America. But we'll do what we've done: we'll fit the navy into what we've committed to and we'll make our contributions. As I argued at the beginning, we have that discretion. Given the nature of the threats, and I suspect given the mood in Washington, a little more emphasis will be put on allied obligations than UN obligations in the defence review, but importantly in the policy that the government has, and we will make whatever contribution we can while we're trying to rebuild the navy. But I don't see the defence review as fundamentally altering what the navy will be asked to do in the future.

[The Chair, Liberal, Stephen Fuhr]

Thank you.

Mr. Fisher, you have the floor.

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

Thank you, Mr. Chair.

Thank you, gentlemen, for being here today and for this vast amount of knowledge that comes at us in 30 or 40 minutes.

Mr. Perry, you stated that a lack of capital funding for naval assets is the most significant defence policy issue with regard to the naval perspective. Mr. Byers sort took us down a road where he might go with regard to switching things up out west, and maybe a new container ship or another container ship in central Canada. I'm interested in your thoughts on this. How would you proceed with these naval assets that you believe we need?