National Defence Committee on Oct. 26th, 2023

[The Chair, Liberal, John McKay]

Thank you, Mr. MacGregor.

Mr. Kelly, you have five minutes.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Thank you.

Before I get into questions about this report, I have a quick question that I would like to get some assurance on from you and your office. We had testimony just on Tuesday that the procurement ombudsman does not have sufficient funds to do his job and to do the reviews that his office is supposed to do. The defence ombudsman's office has said much the same. We've seen the shameful refusal to fully fund the Office of the Auditor General.

Does your office have sufficient funds to do the important work that you do for parliamentarians?

[Yves Giroux]

That's a question that I'm glad to have. I'm also glad to be able to say that I think we have the resources that we need to fulfill our mandate.

Of course, if somebody were willing to double my salary—

[Some hon. members]

Oh, oh!

[Yves Giroux]

—and expand my office, I would not say “no”.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

I do want to move on quickly to the report, but that's good. I'm glad to hear that. You're funded though by the House of Commons, not through finance.

[Yves Giroux]

Exactly.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Okay. I think that's the difference.

Lapsed funding is something that has, I guess, always existed, but it has really become quite a significant number.

How does lapsed funding play into the ratio? If there is failure to execute and actually fulfill the expenditures that have been authorized by Parliament, how does that affect the ratios? How does the money that isn't there affect the numbers and the ratios?

[Yves Giroux]

In our tool, we are basing it on six years of historical data. The lapsing wouldn't appear or would not affect the numbers that are in our report or the simulations that one can do using the online tool. It would, however, affect Canada's capacity to meet the 2% target under the NATO commitment, but it would not affect what's in the tool.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Okay.

Let's look at examples, then, just to help us understand, because I share some of the—maybe—lack of fully grasping the report in the same way as some previous questioners. For example, in the air force, aerial refuelling would be.... I'm sorry—the parlance was just lost on me for a minute here.

You have the fighter jet itself. You have refuelling, and then you have overhead. Is a hangar overhead? Is that indirect, or what is that?

[Yves Giroux]

The fighter jet would be direct. The refuelling in flight would be indirect because that's helping the fighter stay in the air and complete its mission. The hangar could be direct if it's used to house the fighter jets. It could be indirect. I don't have that level of detail, but it certainly wouldn't be overhead.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Okay, tell us about overhead, then. The whole point of the report, I think, is just to demonstrate what an enormous expenditure there is in overhead. People think of the direct and indirect costs when they think of where a military budget goes, but it's actually mostly going to overhead. What are the examples of overhead?

[Yves Giroux]

Examples of overhead could be our contribution to NATO—a financial contribution or an in-kind contribution to NATO. It could also be research and development that's done at DND, the Department of National Defence. It's also parliamentary affairs or the civilians who are working at HQ. If you drive by Colonel By Drive here, you'll see a big building, and that is in good part overhead for military capabilities.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Okay. I think this tool is very helpful and might be very illuminating for many Canadians who have questions about how military budgets are spent.

There's a crisis in recruitment and retention. We're having trouble filling the positions at every stage, whether they would be under overhead, indirect or direct. Maybe I'll give you some more time on what was partly Mr. Bezan's question. How does the inability to get people into these key roles play out in the ratios and our ability to have direct capability?

[Yves Giroux]

It's clear that the capacity or incapacity to recruit and retain military personnel affects the capacity of DND or the Canadian Armed Forces to deliver on its mandate. It's not affecting the ratio and the tools that we are providing here, but I think this tool can give an example as to what if, for instance, the navy increased its uniformed personnel by 1,000, the army by 1,000, and so on. That'll give users a good idea as to how much that would mean in terms of increased indirect, direct or overhead costs. However, the absence of a full contingent of the Canadian Armed Forces is not affecting the simulations themselves or the results that one would get.

[The Chair, Liberal, John McKay]

Thank you, Mr. Kelly.

Mr. Fillmore, you have five minutes please.

[Andy Fillmore, Liberal, Halifax, NS]

Thank you very much, Chair.

I'd like to welcome Mr. Giroux and his colleagues.

I'm joining you from sunny Halifax today, home of the east coast navy, the 5th Canadian Division of the Canadian Army and 12 Wing Shearwater. It's a good Canadian Armed Forces town, so I'm pleased to be joining you from here today.

I want to acknowledge that an undertaking like the model you've built is no easy task, and certainly not for an institution as vast as the CAF, so by its nature we know that this force structure model is but a snapshot. For example, what I mean by this is that one of the assumptions in the model has estimates that reflect a steady-state cost. It assumes the military will continue to operate in a similar manner in the next six years as it has in the past six years that are in the data in the report.

However, it's just not clear to me how we can use a model like this to understand the emergence of new threat environments and new operations in new theatres, like the Indo-Pacific or Ukraine or, now, Israel-Gaza, nor is it clear to me how we can use the model to understand new and emerging CAF needs, like the emphasis on culture change or more costs in recruitment, retention and infrastructure needs, as examples. I wonder if you could tell me to what extent you believe this model accurately and effectively accounts for the complexities in the modern Canadian Armed Forces and in the DND as it stands today.

[Yves Giroux]

That's a good question, and it allows me to explain the capacities of the model but also its limitations.

This model is based on the most recent six years of available data, and in that sense I think it reflects pretty well the state of the world as we know it and as we knew it fairly recently. It can be very helpful in projecting, in the near future, what could be the needs and what would be the costs and the needs in terms of military personnel to adjust, at the margin, for some or all of the 21 military capabilities that we have in our model.

What it doesn't do and is not intended to do is indicate what types of resources and the number of these resources Canada needs to face emerging threats—for example, how much it would cost to send the Canadian Armed Forces to the Middle East or additional support to Ukraine—because that would not be a specific military capability. That would also be highly contingent on government decisions as to what to send and what type of support to provide to these two regions, for example.

It's a good tool for adjusting capabilities—minus 25%, plus 25% or anywhere in between—but it's not intended to project the costs of doing something that has not yet been done or when discrete decisions would have to be made as to the type of interventions to make.

[Andy Fillmore, Liberal, Halifax, NS]

Thank you for that.

Your office has made an investment in creating this tool. I want to ask you about the magnitude of that investment, if you could just tell me that.

[Yves Giroux]

Yes, I can. We used data that was provided to us free of charge by the Department of National Defence. We also needed to have somebody help us, so it involved, probably, three months of somebody working full time. We also had to contract for a value of, I would say, probably, off the top of my head, between $15,000 and $30,000. That would be the extent of the cost of building this model.

[Andy Fillmore, Liberal, Halifax, NS]

Okay. That's good to hear.

To protect that investment, then, do you have some strategies in mind to keep the tool current, to update it as we go forward—periodic updates, usage monitoring? How do we keep the value of this investment moving forward?

[Yves Giroux]

It's probably a matter of getting updated datasets from the Department of National Defence and refining the model, depending on any changes or any hiccups that we or somebody else finds in the model. We've already had discussions with the Department of National Defence. They had some caveats along the lines of what you mentioned, but the cost of maintaining it going forward would probably be minimal compared to the cost of establishing the model.

[Andy Fillmore, Liberal, Halifax, NS]

I think we're going to be out of time in about 10 seconds, but maybe in some of the future responses you could try to help us understand what methodology was used to decide on the 21 capabilities that were covered.

There were some that are missing. The Canadian Forces intelligence command is missing. Maybe if we could try to uncover that methodology that would be helpful too.

Thank you, Mr. Chair.

[The Chair, Liberal, John McKay]

Thank you, Mr. Fillmore.

Madame Normandin, you have two and a half minutes.

[Christine Normandin, Bloc, Saint-Jean, QC]

Thank you.

Before starting, Mr. Chair, for your information, the interpreters have said that with all the microphones in the room that have not been muted, there is too much noise for them to do their work. As a result, we unfortunately missed some portions of Mr. Fillmore's comments.

I will return to my questions. Your analyses and recommendations are based on decisions made by Public Services and Procurement Canada and the Department of National Defence.

Would the Parliamentary Budget Officer's role also enable him to contribute to hypothetical decisions submitted to him by various departments or does that extend beyond his mandate? For example, before making a decision, could a department consult you?