Evidence of meeting #86 for National Defence in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was million.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Jody Thomas  Deputy Minister, Department of National Defence
Alain J. Parent  Acting Vice-Chief of the Defence Staff, Department of National Defence
Elizabeth Van Allen  Assistant Deputy Minister, Infrastructure and Environment, Department of National Defence
Patrick Finn  Assistant Deputy Minister, Materiel, Department of National Defence
Greta Bossenmaier  Chief, Communications Security Establishment, Department of National Defence
Claude Rochette  Assistant Deputy Minister (Finance) and Chief Financial Officer, Department of National Defence

10:05 a.m.

Conservative

Cheryl Gallant Conservative Renfrew—Nipissing—Pembroke, ON

Thank you.

Can you advise on the icebreaking capability of the AOPS vessels and whether or not they can be employed as icebreakers, taking the place of the Canadian Coast Guard vessels in the medium or heavy icebreaker classes?

10:05 a.m.

Deputy Minister, Department of National Defence

Jody Thomas

I'll ask Pat to speak to the specifics of the ships, but as a former commissioner of the Coast Guard, I'm happy to answer. The AOPS vessels are not icebreakers, they're ice capable. An icebreaker has a different design in terms of its stern and the bow specifically, to allow it to manoeuvre around vessels and cut a track in ice. These vessels will be able to operate in significant ice, up to a metre thick, and they'll be able to operate in the Arctic. They would be able to ice break in an emergency, but as a routine function, that's not what they're designed to do.

10:05 a.m.

Conservative

Cheryl Gallant Conservative Renfrew—Nipissing—Pembroke, ON

[Inaudible—Editor] that the AOPS and JSS are vessels that are still years away from a need for maintenance. Can you advise as to how much money DND is allocating for the AJISS contract in each of the next five years?

10:05 a.m.

Deputy Minister, Department of National Defence

Jody Thomas

I'll ask Pat and the CFO to speak to that.

10:05 a.m.

Assistant Deputy Minister, Materiel, Department of National Defence

Patrick Finn

The first Arctic offshore patrol ship will be delivered into the navy next year. It will start to require some maintenance at that point, and every nine months thereafter will be a follow-on ship. The need to start providing maintenance is merging. At this point we've laid out a contract to make sure that it's not like past practices, which would have us at times delivering new fleets—aircraft, armoured vehicles, or ships—and then establishing in-service support contracts for people after the fact. The approach we're taking here has enabled us to bring in the suppliers who perform the maintenance so that they can actually see what's happening up front.

It is a small amount of overhead. I don't have the exact numbers with me right now, but payments will start this coming fiscal year to enable them to be ready once the first AOPS comes into service. Beyond that, for the first five years, because we won't dock a ship until five years into life, it will be largely what we call “second-line”, or second-level, maintenance. We don't have the exact numbers with us. We can look at providing what the cash flow is and what the expectations are of the first five years of that contract.

10:10 a.m.

Conservative

Cheryl Gallant Conservative Renfrew—Nipissing—Pembroke, ON

The committee will appreciate having copies of those, preferably by the end of the week.

10:10 a.m.

Liberal

The Chair Liberal Stephen Fuhr

I'll have to end it there.

MP Garrison, the floor is yours.

10:10 a.m.

NDP

Randall Garrison NDP Esquimalt—Saanich—Sooke, BC

Thank you very much, Mr. Chair.

When we look at estimates, there's always this problem of apples, oranges, and other fruit when we try to compare things from year to year. The minister in his presentation made reference to a 5% spending increase for the Canadian Forces, or for Canadian defence overall. The concern I run into a lot is that in their regular operations, the Canadian Forces are asked to do more and more every year without getting an increase to cover even the rate of inflation.

In terms of operations for DND, what is the increase in this budget year over year? Is it beyond the military rate of inflation, which tends to run 3% to 4%? Are we actually getting enough to cover those increased costs every year?

10:10 a.m.

Deputy Minister, Department of National Defence

Jody Thomas

The CFO loves to delve into the numbers in detail, so I will turn the mike over to him quickly.

Main estimates to main estimates is about a billion-dollar increase for funding 2017-18 to 2018-19. That's for O and M, salary, vote 1.

If the government decides that the Canadian Armed Forces will take on an operation, that is funded through the MC process. We go to government, we lay out the cost of the operation, and generally are reimbursed if we're taking on a specific operation that is a new or even an expanded requirement.

I'll ask the CFO.

10:10 a.m.

Claude Rochette Assistant Deputy Minister (Finance) and Chief Financial Officer, Department of National Defence

Under these current supplementary estimates (C), we have $779 million of new funding. Of that, from an operating point of view, is almost $725 million. As the deputy mentioned, in the new budget for 2018-19, we have $1.7 billion of new money, when you compare main estimates to main estimates. Of that amount, $1 billion is for vote 1, operating.

Coming from SSE when we did the new defence policy, we looked at our funding. You will recall in previous years we always talked about the 2% defence escalator we had; that was part of the evaluation. We look at any operation we have plus any in-service support we need for our capital equipment. As part of our costing, we have also applied a defence inflation rate to ensure that year to year for the next 20 years under the new defence policy, we will have funding for inflation.

10:10 a.m.

NDP

Randall Garrison NDP Esquimalt—Saanich—Sooke, BC

What rate have you applied to this?

10:10 a.m.

Assistant Deputy Minister (Finance) and Chief Financial Officer, Department of National Defence

Claude Rochette

It depends on what components we are looking at. We translate based on Gantt reports; it trends between 4% and 6%.

10:10 a.m.

NDP

Randall Garrison NDP Esquimalt—Saanich—Sooke, BC

I'm trying to get back to apples to apples in the regular operating expenses of the Canadian Armed Forces for the next year. What's the percentage increase?

10:10 a.m.

Assistant Deputy Minister (Finance) and Chief Financial Officer, Department of National Defence

Claude Rochette

The percentage increase is $1 billion over $15 billion that we'll get for next year. It will be 6%.

10:10 a.m.

NDP

Randall Garrison NDP Esquimalt—Saanich—Sooke, BC

That doesn't include any of the new functions. That's a real apples to apples comparison.

10:10 a.m.

Deputy Minister, Department of National Defence

Jody Thomas

That's an apples to apples comparison of vote 1. If we're asked to take on a new operation, there would be new funding for it.

10:10 a.m.

NDP

Randall Garrison NDP Esquimalt—Saanich—Sooke, BC

For instance, a peacekeeping operation that we're talking about in Mali, where is that in this budget or will a new request come forward to support that operation?

10:10 a.m.

Assistant Deputy Minister (Finance) and Chief Financial Officer, Department of National Defence

Claude Rochette

It will be new funding.

10:10 a.m.

Deputy Minister, Department of National Defence

Jody Thomas

A memorandum to cabinet went forward for peace support operations and our CFO would draw down money through the supplementary process for that.

10:10 a.m.

NDP

Randall Garrison NDP Esquimalt—Saanich—Sooke, BC

That will come to Parliament as a supplementary estimate some time later in the year.

10:10 a.m.

Deputy Minister, Department of National Defence

10:10 a.m.

NDP

Randall Garrison NDP Esquimalt—Saanich—Sooke, BC

Something that's been coming up in my riding, and I know it's come up in other members' ridings, is the changes in relocation allowance, both in the way the relocation allowance operates and the taxable status of relocation benefits.

I'll ask about the taxable status first. There's some concern that now some of the relocation benefits or a portion of them are going to be taxable. Has that change come about?

10:15 a.m.

Deputy Minister, Department of National Defence

Jody Thomas

I am not aware of that change, and that's come up twice this morning. I'd like to get back to you with some detail, if that would be okay.

10:15 a.m.

NDP

Randall Garrison NDP Esquimalt—Saanich—Sooke, BC

It's a concern that we're hearing locally.

The second part is the system used to have local offices and a real person whom people could deal with to try to get some idea of how the relocation expenses process is going to work. Now we have a portal and call centres. I know that people are having trouble managing that system and also having some trouble with the pre-loaded, prepaid cards and being required to use those cards to cover expenses.

Have you had a report on how this is working, and are you hearing those same kinds of concerns from people trying to use this relocation system?

10:15 a.m.

Liberal

The Chair Liberal Stephen Fuhr

Unfortunately, I'm going to have to end it there. I'm going to turn the floor over to MP Gerretsen.