National Defence Committee on March 23rd, 2022

[Glen Motz, Conservative, Medicine Hat—Cardston—Warner, AB]

It's been six years. Can someone light a fire under them? When is this actually going to come to be? I'm having a little trouble.

I don't see Ms. Crosby here. Will she be here in the next hour?

[Bill Matthews]

She's available if we need her.

There she is—

[Glen Motz, Conservative, Medicine Hat—Cardston—Warner, AB]

Awesome. Thank you.

You are the CFO, basically, for the armed forces arm, as I take it, because you're here for them on the finance side.

My friend, Mr. Doherty, asked the question of the minister on the $1.2 billion that was unspent in the national defence budget last year. Can you tell me how much was lapsed and returned to the consolidated revenue fund from that $1.2 billion, please?

[Cheri Crosby, Assistant Deputy Minister, Finance, and Chief Financial Officer, Department of National Defence]

You're absolutely right. Every year, every department usually has an amount of money that is lapsed. Last year we did technically lapse $1.2 billion. However, we are not leaving that money on the table. It does not go into the consolidated revenue fund. We are actually able to repurpose and reprofile and realign it to where we need it.

Particularly with the capital investment fund, given that we have a new model that follows an accrual process, we are able to move that money to the projects that need it when needed, and we are also able to respend or spend a certain amount of money that carries forward on our operating—

[Glen Motz, Conservative, Medicine Hat—Cardston—Warner, AB]

How much was reprofiled to later years, and what years was it reprofiled to?

[Cheri Crosby]

I don't have the exact figure handy now for last year, but we reprofiled primarily to this year. There were some delays experienced with COVID. Travel was reduced. We reduced the number of exercises we were doing, and so forth, so our operating budget was able to be carried forward to this year.

We don't usually reprofile the operating budget beyond one or two years.

[Bill Matthews]

Mr. Chair, I can maybe add to that. Of the $1.2 billion lapsed last year, I think we have reprofiled $1.06 billion, so the vast majority. I believe it's mostly into the current year, as the CFO said.

[Glen Motz, Conservative, Medicine Hat—Cardston—Warner, AB]

It's for what projects?

[Bill Matthews]

Typically, when the money lapses, it stays with the same project. There is flexibility there, but the working assumption one can use is that it would stay with the same project, because things are generally sliding to the right. There is flexibility there should we need it.

[The Chair, Liberal, John McKay]

Thank you, Mr. Motz.

Madam Lambropoulos, you have five minutes, please.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you, Mr. Chair, and thank you to our witnesses.

I was hoping to get to ask Minister Anand a couple of questions, but I'm sure you guys are more than capable of answering my questions.

On Monday we heard from several witnesses, professors who spoke to us about Arctic security, so my questions are more about what efforts we're currently making in order to make sure we are ready in the north, considering that Russia is currently our biggest threat and given the actions it's taken in the last couple of months.

Professor Ferguson specifically mentioned that there are gaps in defence in the north and that we currently don't have good enough systems to identify hypersonics in order to detect them. I know that Minister Anand plans on bringing forward a robust package that is meant to modernize the systems that are up there.

I'm wondering if the technology needed in order to be able to detect these hypersonics is actually available, if it needs to be created, and if companies in Canada can be put to work in order to make sure we get to the point where we need to be? Can you give me any information on where we stand currently and what needs to be done in order for us to be ready on that front?

[Bill Matthews]

There's a lot in that question, Mr. Chair. I'll do my best, and I will then turn to my colleague, the vice chief, to see if she wishes to add anything.

First and foremost, an ongoing presence is important. There were exercises with allies up there in recent weeks, but even sailing ships up in the north is important as well.

In terms of the specific question around future proposals, it is in the mandate letter to the minister to bring forward a proposal to modernize NORAD and the continental defence. I can't comment much further on that today, but that is in the mandate letter.

In terms of technology, it's one of those things. There's technology now, but it's also an ever-evolving field and the department does indeed have a research program to monitor the latest and greatest and ensure that industry is engaged, but I think it's premature to comment on what type of technology would be best suited to the risk.

Maybe I'll pause there and see if the vice chief wishes to add anything.

[LGen Frances J. Allen]

Certainly, a physical presence everywhere in the north, given the size and the vastness of our great Canadian north, is never going to be the approach we take. One of the key elements is surveillance and having sensing capability to understand and to be able to see what is happening across our country. The investments that we have seen in the recent budget letter, as they pertain to R and D moving forward in support of NORAD modernization and our sensing, are a big part of what we need to do on those first steps to make sure we start to create an appropriate capacity to have sensing and surveillance.

Obviously, the purchase of the AOPS also gives us a greater capacity to sail in the Arctic offshore. There are a number of things we need to do, but having sensing and surveillance capabilities so that we can act appropriately in the right place at the right time is the best strategy for security in the Arctic.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you very much.

As one of our witnesses also suggested—I'm mentioning this because it's fresh in my mind, and I guess they made me think a bit—we don't necessarily have a way to identify or understand the threats that face us from a purely Canadian context in order to know how much we should be investing in defence and how much we should be, I guess, pulling our weight within NATO.

I was wondering if you could comment on whether you believe that we understand to what extent we need to be delivering and investing, and whether or not this is something you've asked about.

I know you're also here to discuss what asks have been made in the budget and all of that, so could you comment on what you think we should be spending and how much of an increase there should be?

[The Chair, Liberal, John McKay]

You have 10 seconds to answer that question.

[Bill Matthews]

Like anything else, our job is to develop options. Obviously we're having ongoing discussions with allies, because they're also curious about what the government's plans are there. It will be done in collaboration with our allies, but I can't offer more in terms of views on what should be spent. As always, we will work on options.

[The Chair, Liberal, John McKay]

Thank you, Madam Lambropoulos.

That finishes the first hour. We'll go to the second hour, a six-minute round, starting with Mr. Doherty.

You have six minutes, please.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Thank you, Mr. Chair.

Mr. Matthews, can you confirm that the future surface combatant ship designs have gone from 5,000 tonnes to 10,000 tonnes?

[Bill Matthews]

I think it's premature. What I would say is that with the initial design versus where we are now, it's certainly heavier. I wouldn't confirm the exact weight at this stage. There are some ongoing discussions. It's a really critical time for that project in terms of working with both the navy to identify requirements, and our key contractors, Irving, BAE and Lockheed to nail down exact requirements. We will have a better update in months to come in terms of what the actual weight might be.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Are you aware that Irving and Lockheed Martin have recruited British and Americans to work on the program, and that Canadians need not apply?

[Bill Matthews]

I am aware that there's ongoing knowledge sharing between our service contractors, as well as with the U.K. industry. That's important because the U.K. launched the surface combatant equivalent ship before us, so learning from their expertise is a really important aspect in terms of delivering this project. The sharing is actually a really good thing. It's not an all or nothing; it's about learning from our colleagues.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Can you tell us why the gun selected for the warship has the worst reputation of jamming of any naval gun?

[Bill Matthews]

I would have to defer to the navy in terms of the actual requirements that they have identified and how the bid provided by the winning bidder meets those requirements. That might be something we have to get back to you on off-line.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Can you tell us why the radar used is not used by any other navy and is an orphaned system?

[Bill Matthews]

Again, it's a matter of matching up the requirements identified by the Royal Canadian Navy with those that were proposed by the bidder and ongoing discussions there.

I have one of my colleagues here with me, Troy.

If there's anything to add here, Troy, just come on screen. If not, I'll just carry on.