Mr. Chair and committee members, I want to start by thanking all of you for the work you do, the advice you provide, and the experts you talk to. It really has helped inform not only my opinion but also, more importantly, our defence policy, so thank you very much for the tremendous effort you put into your work.
Thank you, again, for the invitation to discuss the supplementary estimates (B) for the Department of National Defence. I'm accompanied today by Deputy Minister Thomas; acting vice-chief of the defence staff Lieutenant-General Parent, and other members of the defence team; and also Greta Bossenmaier, chief of the Communications Security Establishment, commonly known as CSE.
Mr. Chair, I'm here today to address the additional funding required to support the women and men of the Canadian Armed Forces and CSE. Supporting our service members requires investments in the right equipment and infrastructure, as well as investments in their well-being, all the while ensuring that they are fairly compensated. We are doing all this and more through our defence policy, as you know, which is called “Strong, Secure, Engaged”, or SSE for short, which I released in June.
SSE outlines a new vision for defence, a vision that puts our people first, a vision that ensures Canada is strong at home, secure in North America, and engaged in the world. It is a 20-year commitment that makes much-needed investments in the Canadian Armed Forces and its valued personnel. All soldiers, sailors, and aviators trust us to make important decisions about resources, as do all Canadians. I take this trust extremely seriously. The requirements to deliver on these investments can shift over time: some projects move more quickly while others can experience unexpected delays.
The funding requested in these estimates is for existing government commitments, many of which are also captured in the new defence policy. We have moved funds to where they were needed, allowing us to begin implementation on several SSE-related initiatives. We're already managing $565 million of the $615 million of new cash identified in SSE for fiscal year 2017-18.
Since I released the policy five months ago, we have made significant progress on our commitments and have taken decisive action to ensure we remain on schedule. To date we have rolled out a joint suicide prevention strategy with Veterans Affairs, a new peace support training centre in Kingston, and a new cyber operator occupation. We have also received confirmation from both the Canada Revenue Agency and Revenue Quebec that Canadian Armed Forces members, up to the rank of lieutenant-colonel, deployed on named international operations will receive tax exemption compensation backdated to January 1, 2017.
We are proud of these achievements to date. Canadians can expect to see more projects coming to fruition in the weeks, months, and years ahead.
Through the supplementary estimates (B), DND is seeking approximately $1.1 billion in additional funds to cover expected costs for the current fiscal year. These funds are intended for items that were not yet finalized when Treasury Board tabled the main estimates, and they were examined by the committee of the whole last May. You will recall that DND was allocated funding of $18.7 billion for the current fiscal year. These supplementary estimates (B) include a Treasury Board approved pay increase for Canadian Armed Forces members, funding for key procurement projects and programs, and adjustments to current year funding for 20 significant capital projects. The Canadian Armed Forces pay increases underline the importance of this process because as defence minister I want to ensure that our women and men in uniform are appropriately paid for the task we ask them to carry out.
This request includes funding for a cumulative pay increase of 6.34%, as well as an increase of 5.1% to some environmental and special allowances for fiscal years 2014-15 through 2017-18.
Members began receiving their new rates, along with a lump sum back payment, as of June 30 of this year. In total, DND is requesting $333.1 million for the pay increases, plus $66.6 million in statutory funding for the employee benefit plans, for a total of $399.7 million.
The $335.6 million in funding for 20 capital projects will ensure that approved funds are being used now so that projects continue to move forward. This is a net request for 10 projects for which funding allocated in 2017-18 will not be entirely spent. As a result, it will be transferred to 10 projects that require additional funding this year. This will cover expected costs for the remainder of the fiscal year.
We have a new cash management approach, approved by the Treasury Board Secretariat, that offers more flexibility, allowing us to use surpluses in one project to fund demands in another project. Due to the timing needed for Treasury Board approvals, National Defence will be seeking approximately $443 million in funding for initiatives when supplementary estimates (C) are presented to Parliament later this fiscal year. We will only request these funds through the estimates process once we are confident we know exactly what we need. I am proud to report that this new funding process helped the department reduce lapses from $2 billion in 2014-15 to less than $850 million in 2016-17. More importantly, it is the first time since 2008-09 that DND has not let funding expire.
DND is also asking for an additional $332.4 million in funds for additional capital projects. For the Royal Canadian Air Force, we are seeking an additional $161.6 million to advance the fixed-wing search and rescue aircraft replacement project. This is for the 16 new Airbus aircraft that will take over search and rescue duties from our Buffalo and Hercules legacy aircraft. This will allow the Canadian Armed Fores to continue delivering the search and rescue program with new and better resources.
For the Canadian Army, we are requesting an additional $57.1 million to upgrade the 141 light armoured vehicles. These funds are needed earlier than we predicted, because some of the items will be delivered ahead of schedule, which is good news. With this project the army will maintain troop mobility, which is key to success on operations.
For the Royal Canadian Navy, we will be requesting an additional $54.4 million for the Canadian surface combatant project. It will get funds in place for the current project forecast, for definition phase activities, and for the remainder of the fiscal year. The Canadian surface combatant will replace the capabilities provided by the Iroquois class destroyers and the Halifax class frigates. It will also be able to conduct a broad range of tasks in various scenarios. Also included for the navy is an additional funding request of $27.3 million for the point defence missile system upgrade project to upgrade the existing evolved seasparrow missile system on the Halifax class ship.
For our Canadian Special Operations Forces Command, we are seeking an additional $15.8 million for a special IT project that improves the command's ability to handle intelligence and data more quickly and more accurately. Our special operations task force members are the ones we call upon to mitigate against chemical, biological, and radiological threats. They also provide various key capabilities for alleviating nuclear and explosive threats. To this end, DND is seeking $14.5 million to procure specialized equipment.
There are some lower-cost items in our supplementary estimates (B) as well. For instance, DND is requesting an additional $1.7 million in capital funding to complete the HR system upgrade for our military personnel administration project. The upgrade will only be released when all pay-related scenarios have been fully and successfully tested.
Concerning revenues and assets, we will seek to reinvest $1.2 million in royalties from intellectual property. This includes licences awarded for the use of such crown-owned intellectual property as software, defensive equipment, and protective gear.
Real property disposals are another way that DND is supporting the government's commitment to improve military infrastructure by disposing of underused or obsolete assets. DND is requesting to reinvest approximately $780,000 from the sale of three properties—in Norfolk, Virginia; CFB Borden; and Westmount, Quebec. This is only part of the total revenue from the sale of that property. The balance, $2.7 million, will come in supplementary estimates (C). The entire amount will be reinvested in base and wing real property to make it more modern, energy-efficient, and affordable and to better meet the infrastructure needs of the Canadian Armed Forces.
Now, DND is the largest infrastructure owner in the federal government. It is critical that we use funds wisely. Our investments will continue to focus on infrastructure that meets Canadian Armed Forces operational needs. At the same time, we will continue to dispose of underused or obsolete property to help us reduce operating costs and liabilities as well as greenhouse gas emissions.
For the Communications Security Establishment, Canada's centre of excellence for cyber operations, we are requesting approximately $12.3 million. This amount will help maintain the security of our IT systems while ensuring that vital information that Canadians entrust to the government is protected. DND will also receive $2.5 million in transfers from various government departments in these estimates, and we will transfer $18.9 million to other departments.
Mr. Chair, all of the items outlined in the supplementary estimates process today directly support our whole-of-government approach and address the priorities of both the Government of Canada and the Canadian Armed Forces. It also demonstrates our clear commitment to Canadians and to the women and men of the Canadian Armed Forces who support us every single day.
Thank you. I'll take your questions.