National Defence Committee on Nov. 29th, 2017

[The Chair, Liberal, Stephen Fuhr]

I'd like to welcome everybody to the defence committee.

Minister, department officials, members of the Canadian Armed Forces, thank you very much for attending today to discuss supplementary estimates (B), as in bravo. I know most of us have done this a few times now, so I will spend little time talking about the process so we can get right to the discussion.

Minister, I'm happy to give you some time to give your opening remarks, and then we'll get into questioning. The floor is yours, sir.

[Harjit S. Sajjan, Liberal, Minister of National Defence]

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.

[The Chair, Liberal, Stephen Fuhr]

Thank you very much, Minister.

Just as a reminder to the committee, we'll have the minister for about an hour. That will give us enough time to get through our established speaking order, at which time I'll suspend and let the minister depart. We'll have the remaining officials for about 45 minutes.

That said, the first question will go to Mark Gerretsen.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Thank you very much, Mr. Chair.

Thank you, Minister, for coming today. As you know, I'm from a riding that has a long military tradition. That's Kingston and the Islands. We take great pride in the fact that we have the historic Fort Henry, a world-class military base, and of course the RMC, the Royal Military College. One of the remarkable things I find about our base and the personnel who work on the base in particular are the men and women who work there and their dedication. It's not just their dedication to the military and their profession but their dedication to community building. The men and women who are in uniform in my riding are also very active members of the community. They get involved in coaching sporting teams. They're involved in charitable organizations. They are really embedded into our communities.

One of the remarkable things I found when our committee travelled abroad to visit some of our troops in Latvia and Ukraine was just the incredible amount of professionalism that was on display, the way that commanded the attention of our colleagues from other nations, and how they were receiving Canadians in particular. I was very happy to see in the defence policy review real and solid dedication toward supporting men and women in uniform being the number one and main focus. I'm wondering if you can provide an update in terms of the supplementary estimates and how you are investing in the forces, most importantly, in our men and women in uniform.

[Harjit S. Sajjan, Liberal, Vancouver South, BC]

In terms of the experience you had, I was very happy to see the committee out meeting the troops on real operations. We get to see them here in uniform, but it's hard to really get a good appreciation until you see them in action. More importantly, as you stated, you get the reactions of other people to what they are doing.

This is one of the reasons why, in the supplementary estimates, the pay raise is so important. By having an over 6% pay increase, we are able to make sure we are thanking them. More importantly, this pay raise is not about just now; it is actually retroactive, going back to 2014. They were getting their lump sum cheques back in June.

When we launched our defence policy, we wanted to make sure our members felt that we were looking out for them. One of the reasons we also put in place the tax-exempt compensation for international named operations was that those impact the members as well as their families.

Our defence policy not only puts significant emphasis on our people but it's also to remind everybody about their families. That's why we're investing heavily in the MFRCs and building that resilience. We still have a lot of work to do, because we have to implement the defence policy. That resilience piece is also going to be extremely important. As we jointly announce the suicide prevention strategy with Veterans Affairs, we're going to be working on and finalizing the plans for how we're closing the seam and having that seamless transition from the military.

We are absolutely seized of this, and we're going to continue to work hard. That pay increase was one way of starting.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Minister, you touched on something else I was going to ask about, in particular, supporting our military personnel from recruitment right through to retirement and beyond and, equally importantly, supporting their families. I know that CFB Kingston has a very active military family resource centre that helps military families, particularly when their loved ones are abroad.

These programs and resources, as you have indicated, are important, and you touched on the pay and benefits aspect of it. I'm wondering if you can comment not just on the benefits part of it but on how important it is to make sure the families are also taken care of at home when their loved ones are abroad, and what that means not just for the family members here but also for the performance of our personnel abroad.

[Harjit S. Sajjan, Liberal, Vancouver South, BC]

You raise a good point.

I think that for all Canadians, when they go to work, if things are not good at home—if they have a sick child at home and they're thinking about them—it's sometimes hard to focus on work. Imagine for someone in the military who is deployed how difficult it can be when they physically can't actually be there.

Putting those resources into place is giving the member and their family a sense of confidence. We are also making sure that the wider Canadian Armed Forces have the support structure in place so that a member's family also feels that they are going to be looked after. When their family member is deployed, they have the extra burden of not knowing what they are doing. The family member who has been deployed knows exactly what they are doing, but they are missing their families.

It's an extremely difficult time, and we want to make sure they have the right support structure. That's why the investments in the MFRCs are so important. More importantly, we want to make sure the MFRCs and the support structures on the base actually cater to the different types of needs each base has.

One particular example was that of a single mom who was a military police officer working the night shift and who couldn't get day care. Adjustments can be made to those things now within the bases, because we're putting investments into the MFRCs so that she can actually go to work and not have the extra burden of finding someone to look after her child when she has to do night shifts.

Those are tangible examples I can provide to you of how deeply we're looking at this.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Thank you.

[The Chair, Liberal, Stephen Fuhr]

Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Mr. Chair.

Thank you, Minister, for being here.

It's funny: my furnace never breaks down when I am at home; it always breaks down when I'm gone, so your comments about being away and taking care of your family are very important, for sure.

In your opening remarks, you talked about the vision for defence and what we need to get our troops and our forces the appropriate tools. I'm going to look at the navy side of things at this point in time and the Canada surface combatant plan we have in place with Irving Shipbuilding.

We understand that November 30 is the final deadline for proposals to be submitted. There's been some expression of frustration with the process, given the combination of the 50 changes in design that were requested of the bidders and then, of course, regarding the intellectual property they have to voluntarily give up as they make their proposal. How are you dealing with that, and how many of the bidders we had at the start are still there and are going to be putting proposals in place tomorrow?

[Harjit S. Sajjan, Liberal, Vancouver South, BC]

Our national shipbuilding strategy is a nation-level strategy to make sure that our navy has the right ships for well into the future.

[Randy Hoback, Conservative, Prince Albert, SK]

I only get seven minutes, so you'll have to be fast, please.

[Harjit S. Sajjan, Liberal, Vancouver South, BC]

Sorry about that.

We'll find out how many bids have come tomorrow when it closes. We're confident that the process we have undertaken has been robust enough and fair enough so that many companies can compete.

Some of the issues that you talk about, like intellectual property, have been addressed.

Patrick Finn can speak to it in more detail.

[Patrick Finn, Assistant Deputy Minister, Materiel, Department of National Defence]

Thank you, sir.

There were no design changes made in the RFPs, so our requirements have remained unchanged. After the first round of evaluations, we got some really good feedback on how to improve and streamline, so the changes we made were all about how to streamline the evaluation.

On intellectual property, there are very different views from the bidders. We've taken a middle ground. We clearly have to protect the taxpayer. This is a ship that will be in service for 50 years. We want to make sure we can maintain the readiness of the Royal Canadian Navy for those 50 years. I would say, on some of the parts that were not just contentious but on which bidders had different views, we've set them aside such that we've created a process in which we've said that, for the most competitive bidder, we'll spend 45 days negotiating the final intellectual property rights to try to deal with the disparate views.

It really is different around the world. The problem is that the feedback we got was so different that you could not write a set of intellectual property clauses for everybody.

[Randy Hoback, Conservative, Prince Albert, SK]

With this, you've created some delays, of course. We've delayed out to the 30th. Now there's talk about a construction gap that's going to happen at Irving shipyard. How are we going to deal with that, and what's your plan to make sure that gap isn't there?

[Harjit S. Sajjan, Liberal, Vancouver South, BC]

Can I get the first part of the question again?

[Randy Hoback, Conservative, Prince Albert, SK]

With the delays, you're going to see what they call a construction gap at the shipyard, with layoffs and unemployment as a result. There could be costs of some $3 billion in the ships because of that.

[Harjit S. Sajjan, Liberal, Vancouver South, BC]

We started out by creating the national shipbuilding strategy, and we were kind of kick-starting our industry. We knew early on that a lot of work needed to be done, but in time, as things get better with the workforce—they have better trades and more experience—this will improve.

We're working very closely with Minister Qualtrough on this in trying to address some of those gaps. We have teams embedded directly with the shipyards to be able to speed up the process and decision-making.

We knew they were going to have delays, but through time, we're hoping that some of these delays are going to be decreased because of the efficiency they will be able to create.

[Randy Hoback, Conservative, Prince Albert, SK]

Would you be able to give this committee a timeline now that's updated with the current delays and relevant information?

[Harjit S. Sajjan, Liberal, Vancouver South, BC]

No, not at this time. In terms of the time frame that we have to discuss, I'd be happy to provide an update down the road.

[Randy Hoback, Conservative, Prince Albert, SK]

Do you have any idea as to when down the road you'd be able to provide that?

[Jody Thomas, Deputy Minister, Department of National Defence]

After the first AOPS is complete, we'll have a better idea of the total timeline to finish the AOPS. Then we'll be in a different process.

[Randy Hoback, Conservative, Prince Albert, SK]

Do you have an approximate date?

[Jody Thomas]

In the spring.

[Randy Hoback, Conservative, Prince Albert, SK]

That works for me.

Moving on to joint supply ships, as you know, Seaspan is building new joint supply ships, and we went in and leased a ship, I understand, from Davie so that we have one ship for the interim.

Are we looking at leasing a second ship so that we have a ship on both coasts? Do you believe it's important that we have a supply ship on both coasts?