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Evidence of meeting #42 for Public Accounts in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cost.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Kevin Page  Parliamentary Budget Officer, Library of Parliament
Sahir Khan  Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Peter Weltman  Senior Director, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Michelle d'Auray  Secretary of the Treasury Board of Canada, Treasury Board Secretariat
Robert Fonberg  Deputy Minister, Department of National Defence
Dan Ross  Assistant Deputy Minister, Materiel, Department of National Defence
François Guimont  Deputy Minister, Deputy Receiver General for Canada, Department of Public Works and Government Services
André Deschamps  Commander, Royal Canadian Air Force, Department of National Defence
Simon Kennedy  Senior Associate Deputy Minister, Department of Industry
Kevin Lindsey  Assistant Deputy Minister, Chief Financial Officer, Finance and Corporate Services, Department of National Defence
Tom Ring  Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services

9:40 a.m.

Parliamentary Budget Officer, Library of Parliament

Kevin Page

Sir, Canada is. Even if we look at the CF-18s—and we have a fighter pilot at this table right now—we know that they've been in service for over 40 years, so why would we use a 20-year number?

9:40 a.m.

Conservative

Chris Alexander Conservative Ajax—Pickering, ON

Which department is going to buy this aircraft for Canada?

9:40 a.m.

Parliamentary Budget Officer, Library of Parliament

Kevin Page

Taxpayers are going to buy the—

9:40 a.m.

Conservative

Chris Alexander Conservative Ajax—Pickering, ON

Which department, under our procurement laws, will acquire the aircraft?

9:40 a.m.

Parliamentary Budget Officer, Library of Parliament

Kevin Page

The Department of National Defence, sir.

9:40 a.m.

Conservative

Chris Alexander Conservative Ajax—Pickering, ON

And what is the standard life cycle assumption that National Defence has used for years for aircraft acquisitions?

9:40 a.m.

Parliamentary Budget Officer, Library of Parliament

Kevin Page

Sir, the one that DND uses should be the one that's consistent with Treasury Board policy. It would vary for different types of equipment.

9:40 a.m.

Conservative

Chris Alexander Conservative Ajax—Pickering, ON

So is it a 20-year assumption that they have used in the past? Yes or no?

9:40 a.m.

Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament

Sahir Khan

Sir, the idea is, for fiscal—

9:40 a.m.

Parliamentary Budget Officer, Library of Parliament

Kevin Page

They've used it in the past. If they use it, does that make it right?

9:40 a.m.

Conservative

Chris Alexander Conservative Ajax—Pickering, ON

Would it not be reasonable to expect the Parliamentary Budget Officer of the Parliament of Canada to do a budget estimation that reflects life cycles used by departments of the Government of Canada?

9:40 a.m.

Parliamentary Budget Officer, Library of Parliament

Kevin Page

If you want a Parliamentary Budget Officer to provide independent estimates, and we would work with Treasury Board policies that we would hold accountability officers accountable to, the Parliamentary Budget Officer will start with Treasury Board policies.

9:40 a.m.

Conservative

Chris Alexander Conservative Ajax—Pickering, ON

Does independence—

9:40 a.m.

NDP

The Chair NDP David Christopherson

I'm sorry, Mr. Alexander, your time has expired, sir. Thank you very much.

We have only a couple of minutes, but those minutes belong to Mr. McKay. You have the floor, sir.

9:40 a.m.

Liberal

John McKay Liberal Scarborough—Guildwood, ON

Thank you, Chair.

Just pursuing this argument a little further, it seems to me that DND is the only outlier here. The U.S. accepts this formula; Canada, through Treasury Board, accepts this formula; the U.K.; Queen's University; pretty well any entity.

Am I correct to assume that the only entity that seems to go for only 20 years is DND, and they seem to be offside with Treasury Board guidelines?

9:45 a.m.

Parliamentary Budget Officer, Library of Parliament

Kevin Page

Sir, we're very comfortable in providing our estimates to you, to all parliamentarians, on a 30-year basis, and we think that's quite consistent with Treasury Board policies and international practices.

9:45 a.m.

Liberal

John McKay Liberal Scarborough—Guildwood, ON

I'm inclined to agree with you. I think it is. The issue then becomes trying to get DND to be consistent with Treasury Board guidelines and consistent with every other entity's costing process. It seems that even with moving to the acquisition cost, they still don't want to come forward with consistent methodology so that Canadians can compare apples to apples, as opposed to apples to oranges to lemons.

9:45 a.m.

Parliamentary Budget Officer, Library of Parliament

Kevin Page

Sorry, as I alluded to earlier, I think as we move forward, if we could agree on the way parliamentarians will be presented cost of acquisition--here's the way they will be presented operation and support cost, on a total life cycle cost basis; here's our reasonable estimate for life cycle based on other international practices other people are using--I think the go-forward process will be much enhanced.

9:45 a.m.

Liberal

John McKay Liberal Scarborough—Guildwood, ON

A final point--

9:45 a.m.

NDP

The Chair NDP David Christopherson

Mr. McKay, your time still remains, but the meeting doesn't. It is now one hour after we started, so I must bring this to a conclusion.

Mr. Page and your colleagues, thank you all very much for your participation today.

We will suspend for three minutes while we exchange witnesses. Please, everyone, be ready to go in three minutes. We now stand adjourned for those three minutes.

9:50 a.m.

NDP

The Chair NDP David Christopherson

I now declare the 42nd meeting of the Standing Committee on Public Accounts back in order for the second hour of our meeting.

I will welcome our deputies and staff here from our previous meeting. I know they've just been waiting and waiting to come back and continue the exciting discussions we've been having. Thank you all very much. We do appreciate it.

I believe every single person returned. I'm not sure whether that says a lot about how good you're doing or how ineffective some people here are, in leaving you still being able to walk. However, you're all here and we do appreciate it.

Colleagues, if you are ready, we will begin. As I mentioned at the beginning, we will do a fresh rotation and start from the beginning and again we will continue until such time as our committee time expires.

With that, unless there are any interventions from colleagues—I see none—we will then proceed with Mr. Saxton.

Mr. Saxton, you will kick off the rotation. You now have the floor, sir.

9:50 a.m.

Conservative

Andrew Saxton Conservative North Vancouver, BC

Thank you, Mr. Chair.

My first question is for the Treasury Board secretary.

In his remarks to our committee just before you arrived, the Parliamentary Budget Officer stated that he followed Treasury Board guidelines when he decided to choose a 30-year life cycle, and he implied that DND may not have followed Treasury Board guidelines when they chose a 20-year life cycle.

Could you please clarify what the Treasury Board guidelines are for the life cycle?

9:50 a.m.

Michelle d'Auray Secretary of the Treasury Board of Canada, Treasury Board Secretariat

Thank you, Mr. Chair.

The Treasury Board guidelines are applied in different circumstances. When you are providing information for approval for a project, the life cycle refers to the life cycle cost of the materiel or the asset to be acquired. In the context of an aircraft or air weapons system or the air materiel that the Department of National Defence has procured even in the very recent years, the Treasury Board submission has always looked at a 20-year life cycle costing, especially with regard to maintenance, because beyond a 20-year timeframe, as I indicated in my previous testimony, it becomes very difficult. We consider it high risk to go beyond that timeframe for the purposes of costing for an acquisition.

9:55 a.m.

Conservative

Andrew Saxton Conservative North Vancouver, BC

Thank you very much, Madam Secretary.

My next question is for the Department of National Defence. Can you describe what the 2006 memorandum of understanding has meant for Canada's involvement in this program?

May 3rd, 2012 / 9:55 a.m.

Robert Fonberg Deputy Minister, Department of National Defence

Thank you.

Mr. Chairman, I would ask Dan Ross, ADM Materiel, to speak to that question, as he has been intimately involved in the MOU.