Mr. Speaker, on April 28, 1994, the Sea King fleet was temporarily grounded for the inspection of fuel leaks following an emergency landing by one aircraft. On October 31, 1994, a report of the Special Joint Committee of the Senate and the House of Commons of Canada Defence Policy recommended quick action on the acquisition of new shipborne and rescue helicopters. On December 1, 1994, the white paper on defence policy indicated that the government would go ahead with the replacement of the Sea Kings and Labradors in the near future.
On March 31, 1995, the Canadian government and Unisys GSG Canada, one of the prime contractors for the EH-101 contract, reached an agreement on the payment of $166 million as compensation for the work done by the company prior to the cancellation of the contract. On May 1, 1995, a Labrador based at CFB Greenwood in Nova Scotia made an emergency landing because of mechanical problems. On September 20, 1995, a Sea King made an emergency landing because of mechanical problems. On November 8, 1995, the government announced its intention to proceed with the acquisition of new search and rescue helicopters.
On November 9, 1995, the Minister of Public Works and Government Services announced an agreement in principle had been reached with EH Industries on the termination costs of the contract for the EH-101 airplanes.
On January 23, 1996, the government announced the termination costs for the contract with EH Industries for the EH-101 airplanes were $157.8 million. On March 8, 1996, the Minister of National Defence said the decision on the shipborne helicopter project would be deferred for an additional year. On August 23, 1996, three of Canada's fleet of helicopters were grounded, pending the inspection and repair of cracks found in the tail section of the air frame. On November 27, 1996, the government issued the request for proposals from aircraft manufacturers for the rescue helicopter project.
On January 13, 1997, a Labrador made a crash landing in the Georgia Strait after a fire had broken out on board. This was one of the most serious of several emergency landings made by Labradors and Sea Kings in late 1996 and early 1997. On May 5, 1997, four manufacturers met the deadline for proposals for the new rescue helicopter: Agusta-Westland, Boeing Helicopter and Sikorsky.
On January 5, 1998, the Minister of National Defence and the Minister of Public Works and Government Services announced that EH Industries had been selected to supply 15 Cormorants to replace the Labrador search and rescue helicopters. On April 23, 1998, the Department of National Defence announced the signing of the contract with EH Industries and a cost of delivery of 15 Cormorants at $580 million. On October 2, 1998, a Labrador helicopter 413 Squadron based at Greenwood, Nova Scotia, crashed in the Gaspé Peninsula, killing all six persons aboard. The remaining 12 Labradors were grounded as a precaution. On October 15, 1998, all 30 Sea Kings were grounded after the discovery of a fuel leak in one of the aircraft. All but one returned to flight operations on October 18.
Let us shift here and talk a little about the latest budget. From the point of view of the Department of National Defence and the Canadian forces, the federal budget is highly unsatisfactory. Although it professes to address the post-September 11 environment, it largely ignores the urgent requirements of an essential component of national security, namely, the armed forces. There are two main concerns.
Additional funding assigned to general military capabilities and to operational readiness comprises only $510 million over two years. Whereas annual shortfalls in the DND budget, computed by the auditor general and others, far exceed that sum. The manner in which funding for defence is presented lacks clarity and could be misleading for those interested in defence issues but not well informed on budget procedures.
In raw terms the budget allocates $1.2 billion to DND and its agencies over a five year period starting in fiscal year 2001-02 to 2006-07. Full details are available on the Department of Finance website, www.fin.gc.ca.
Over a five year, plus this year, horizon amounts from the above are assigned as follows: expand anti-terrorist capacity, $119 million; nuclear biological chemical threats, $513 million; and contingency, $100 million. The balance is assigned over two years including this year as follows: supporting Canada's military, $510 million. That is $1.2 billion.
Members should note that the budget document, budget plan 2001, also includes $396 million for emergency preparedness which is on page 92 of the document. In fact this amount will be assigned to and disbursed by other departments and agencies and is not included in this analysis. Much the same applies to the $513 million for NBC threats although some of it will remain in DND.
The additional funding is useful but only $510 million is available for application to conventional military capabilities and the commitments assigned under the 1994 white paper on defence.
Moreover the $510 million is specifically assigned as follows and therefore not available to address the long list of short hauls in the operation readiness of the CFC and these have all been pointed out not only in this speech today but by the Auditor General of Canada.
Operation Apollo anti-terror coalition operations is $210 million, capital purchases $300 million. The funds for Operation Apollo have already been spent and will not contribute to stopping the decline of the operational readiness in the Canadian forces as a whole. The $300 million for capital purchases will be applied mainly to payments for projects already underway. For example, the lease to purchase payments for the new fleet of Victoria class submarines will relieve some pressure in future years in the DND capital program.
The expanded anti-terrorist capacity noted above refers to raising the strength of joint task force 2, JTF2, as well as providing it with appropriate equipment. Funding this new specific task will not alleviate the general malaise of the forces and in terms of the additional manpower requirements will impose further strains on an organization already pushed to the breaking point.
Recently a number of agencies issued reports and studies in which they analyzed the problems arising from the failure of the government to provide the funds necessary for DND and the Canadian forces to implement the policy set out in the 1994 white paper on defence. They were: the Royal Canadian Military Institute, the Federation of Military and United Services Institutes of Canada, the Conference of Defence Associations, Canadian Defence and Security in the 21st Century, and the House of Commons Standing Committee on National Defence and Veterans Affairs.
The government ignored what the committee of the House requested the House of Commons to do. I know the defence committee is one of those in which members work closely together because it is such an important issue for Canada. It is probably one of the most non-partisan committees where we work together as Canadians like foreign affairs. It made recommendations which have been ignored by the government. We should all be ashamed of that. The House of Commons Standing Committee on Finance has also made recommendations.
All of these reports and studies listed serious problems within the Canadian Forces arising inter alia from a lack of trained manpower, insufficient training, rusting out equipment and inadequate logistic support.
On December 7, 2001, the Auditor General of Canada issued her annual report. It verified and supported the findings of other reports listed above. In particular, it noted there was an ongoing deficit in the end operations and maintenance of $1.3 billion per annum. This meant that over a two year period DND would need $2.6 billion merely to clear the deficit as shown above. The 2001 federal budget provided only $510 million over two years. That amount is already spoken for in other areas.
In previous reports the auditor general identified an additional $6 billion to $10 billion over the next decade which would be needed for major equipment replacement. Yesterday in her report she talked about taking 30 years to catch up.
To date, DND has managed to survive by reprioritizing and reallocating resources. The so-called rob Peter to pay Paul approach, considering the failure of the 2001 budget to provide significant new funds, is no longer viable. It is therefore likely that a defence policy update scheduled for release in early 2002 will direct further downsizing of the Canadian forces, with associated elimination or reduction of combat capabilities.
The budget plan 2001 lacks clarity in addressing the above situation. For example, it sets out to illustrate incremental defence funding from 1999 to 2001. It provides information in a manner that could mislead the reader. The following statement from page 99 of the budget plan 2001 illustrates the point:
The $3.9 billion of new funding in the budgets of 1999 and 2000, together with the more than $1.2 billion of new funding in this budget, means that the government will have increased DND funding by $5.102 billion over the next five years.
The total of $5.102 billion is computed as follows: budget 1999, $550 million; budget 2000, $3.35 billion; and budget 2001, $1.202 billion.
It has already been shown in earlier paragraphs from this memo that only $510 million of the $1.202 billion allocated to DND budget 2001 would be available to support existing military capabilities of the Canadian forces. Moreover, this amount is designated in advance for specific purposes. The $550 million from the actions taken in budget 1999 is being applied to quality of life projects. It is very necessary, but not directly applicable to the rehabilitation of military capabilities.
It could also be critiqued in the same vein as illustrated in the next paragraph. It is, however, the totals of $3.35 billion shown for budget 2000 and the grand total which is 1999, 2000 and 2001 of $5.102 billion that are most questionable in the manner in which they are represented. The problem lies with confusion over approved rises in the base of the DND budget in a given year versus cumulative totals shown for succeeding years.
The first rise is indeed an increase in funding which raises the level of the budget base. However, the government refers to the ongoing insertion of the rise over a period of years as an investment. This may be correct, but there is also an implication that the level of the base has continued to rise past the first year. When that is not the case there are clear differences in meaning between the two terms, raise the base and total investment. These are explored in detail. Paragraph 2 on page 99 of the budget plan states:
This budget therefore commits substantial funding to enhance emergency response on preparedness. It allocates more than $1.6 billion over the next five years to improve the government's ability to detect, prevent and respond to threats, and to fund Canada's military participation in the international coalition against terrorism.
In conjunction with this quotation it should be noted that the form of budget 2001 is quite different from previous practice. Instead of making allocations directly to government departments and agencies, it assigns money to the number of agendas. DND and the Canadian forces are included in the security agenda. For this reason, most of the $1.6 billion would not be available for DND expenditure as already noted above for the emergency preparedness allotment.
Moreover, DND allocation funds are assigned to objects of expenditure in advance. Many are outside of the DND, for example, nuclear, chemical, and biological threats. The political intent of the above quotation may be interpreted as follows: to respond to public concerns regarding economic downturn and terrorism, to channel most of the new DND funds into local economies, and to deflect criticism by allies and analysts that the Canadian forces, including elements assigned to Operation Apollo, are not battle ready. Elsewhere the government has recognized this deficiency by stating that Operation Apollo would not be committed to combat operations.
We see that today in the operation announced by the Americans. There was nobody from Canada standing in that room and they were talking about defence for North America. We have no respect. We are losing it because the government has no respect for the military. It has no respect for the traditions of Canada in working with our allies to the south, our best friends and biggest traders. It is very unfortunate.
The results of budget 2001 indicate the operational readiness of the Canadian forces would continue to decline mainly as a result of underfunding. That is not just the opposition complaining which the opposition tends to do. It is the Auditor General of Canada, the one person we must respect who checks the books and keeps us in line. She said our military is in dire straits. We have ships with nobody to man them and officers without uniforms. The government can have fancy toilets in its jets, but Canadian soldiers do not get porta-potties over in Afghanistan.
As a result of underfunding there is a lack of trained manpower, the progressive rusting out of equipment and inadequate logistic support. The government does not intend to raise the defence expenditures above the level of 1.1% of GDP and therefore the policies stated in the 1994 white paper on defence would remain largely unaffordable in the context of government priorities.
We recommend the government initiate at once a broad national security review comprising a comprehensive public and parliamentary examination of Canada's needs in the realm of foreign and defence policy. At the conclusion of the process it should publish a new white paper on defence with a government commitment to adequate long term funding written into it. This process was recently undertaken and implemented in Australia. If we were to have a white paper, we must have the commitment from the government.
There is no sense in starting any studies unless the government says in advance that when this is done and it goes through a committee of the House of Commons that the government would support it with the necessary funds. That would right away improve the morale of our forces. Even if it took us a little while to get that done, at least they would know that we would sit down, put together a white paper that talked about where we would go in these areas and that the government would be committed to fully fund it after a full debate in committee and in the House.
The figures and explanations provided on page 99 of the budget plan document are most contentious in terms of misleading the reader and the public. To analyze them one must understand the basic framework of departmental budgets. The latter should be perceived in two parts: the foundation and a smaller superstructure, both of which exist for only one year and which must be rebuilt at the start of each new fiscal year.
The foundation is known as the base and the superstructure comprises sums of money added outside the base during the year. The complete structure is described in the annual departmental estimates. Recently, in the case of DND, the so-called fiscal framework budget, it is running about $9.5 billion per annum, and the estimates at about $11.5 billion. It is important that the DND budget base be set high enough to fund the commitments assigned to the Canadian forces in the 1994 white paper on defence.
An adequate budget base provides stability, allows coherent forward planning and keeps the Canadian forces in an effective state of operational readiness. If there were no federal budget to provide additional money to DND or if a given budget does not provide an additional allocation, then the central agency should build a base as it did in the previous year and, with approvals from cabinet, Treasury Board, Department of Finance and Privy Council Office, should add the superstructure as required, for example, in supplementary estimates for expenditures approved during the year.
The important point is that the base is made up of individual bricks, most comprising increases approved for the base in previous years. Hence, if a base increase is not approved in a given year, it must be inserted again in each succeeding year. Therefore it is only a real increase in defence funding the first year it appears. In succeeding years it is merely reinserted to keep the base at the approved level. Since the last base increase in budget 2000, this brick has become known as the program, integrity or sustainability.
For fiscal year 2000-01 it was set at $400 million. Since the additional funds allocated to DND in budget 2000 total $3.3 billion, including subsequent extrapolations out to fiscal year 2006-07, one may ask why the brick is only worth $400 million.
Part of the answer is that the $3.3 billion represents cumulative funding originally plus yearly insertions over that extended period in fiscal year 1999-2000. As well, other funds were designated and applied directly to such objects of expenditure as provincial disaster relief and the war in Kosovo. These and other factors meant that in the end, the brick of real new money applied to the base in the first year was only $400 million. A similar analysis could be applied to the brick for quality of life added in budget 1999 and amounting to $140 million.
On the other hand, the base raising brick of $400 million approved in budget 2000 has subsequently received approval to appreciate in a limited amount over the period to fiscal year 2007. This will raise the budget base incrementally during that period by an amount totalling $300 million. This means that between 2001 and 2007 the DND budget base will rise by $400 million plus $300 million for the equivalent of $700 million.
The government's interpretation of this situation differs from the above analysis. The government adds up all the bricks, the initial one plus the annual reinsertions in a cumulative fashion, and calls it a total investment in defence amounting to $5.1 billion. This could mislead those unfamiliar with budget procedures into believing that the government has made additions to the DND budget base when it has really only made insertions to the budget.
Using the government's logic, it could be said that the cumulative DND budget allocations for 2001 to 2007 totalling some $60 billion are also an investment in defence. The annual insertion of bricks serves to preserve the new level of money originally approved in any given budget, but afterwards it is not an increase in funding.
What is not acknowledged in the cabinet situation is the fact that the foundation is not large enough to address the annual ongoing DND deficit of $1.3 billion per annum identified by the auditor general in her report of December 2, 2001. What is required to resolve the severe underfunding problem within DND is the addition of a new and larger brick to the DND budget base in the order of $1 billion per annum in each of the next five years to bring the budget base up to a steady rate of some $14 billion to $15 billion. Until that happens, to use another analogy, any lesser increase in real funding will only serve to maintain life support systems rather than to cure the patient.
I would like now to quote a comment one of my colleagues, the hon. member for Lakeland, has raised in the House on many occasions:
While our men and women are risking their lives in the name of freedom, justice and democracy, it is incumbent on members of the House to provide support not only in our words and our hearts but more importantly through our actions. We must ask whether the government is doing enough to defend those who defend us. I must answer no to that question.
Canadians have been asking the same question. Not only the Canadian public but the government's own defence committee, military analysts from coast to coast, retired servicemen, the auditor general and even some of our allies have been urging Canada to provide a greater commitment to the military. The answer they all keep getting is no, the government is not committed to the military and is failing the men and women of the armed forces.
The military was virtually ignored in the December budget in spite of the fact it was called a defence and security budget.
The auditor general made it clear this week that we need a minimum of $2.2 billion a year to sustain the military at the current level and more to rebuild. The government offered less than 5% of that to the military. That is unacceptable. It shows the kind of commitment the government has made to the military. It is unacceptable to the men and women who put their lives on the line every day and who are certainly putting their lives on the line for our country in the mission in Afghanistan.
I will quote the Prime Minister's response to the criticism of people who care about the military. He said over the Christmas break “There is a bunch of guys who are lobbyists who are representing those who sell armaments, who tell you of course they will give you a better lunch if they had more comments”.
That was the Prime Minister's response when asked to comment on people who genuinely care about the military. It is shameful that our Prime Minister would point the finger and blame it on people who really care. Their only fault was pointing out what is really happening in the military.
I wonder who lobbied to get those two jets the Prime Minister needed so badly, those new fancy toilets in a jet that goes a little farther. I wonder who lobbied to sell the government the $174 million satellite dish that is sitting in a warehouse and which nobody is using. I wonder who lobbied to get all those grants that are going out with kickbacks to the Liberal Party.
The government has an absolutely shameful record on the military and is arrogant and corrupt. There are court cases right now with two people convicted in Quebec for doing things the wrong way with grants.
The government wants to knock anybody who talks about the realities of life. We continue to get the assurances of members of the government and the Minister of National Defence that the troops are well equipped for the mission. They say they have all the necessary resources to do their job and they are doing it safely. They say everything has been well planned and thought through and that the government has learned from past mistakes. These are the things we are told by the Prime Minister and the Minister of National Defence on a regular basis.
The reality is in the auditor general's report. It is too bad I am running out of time because I have a lot of pages from the auditor general's report. There is enough in it to talk for hours about the auditor general's report, about the waste in the government, not only in defence but in other departments. Is it not a shame that it takes the auditor general to tell the government not just last year, but this year it is even worse, what the government is not doing for our military.
It is time for a change in the country. It is time for a new younger vision, a younger leader and he will be sitting on this side after September 13. The country needs a change. It is so obvious by the auditor general's report. It is so obvious from the arrogance on the other side of the House.