Mr. Speaker, I have great difficulty accepting the proposition that the province of Quebec has suffered a disproportionately low share of defence spending over the years. I would aver that the greatest threat to the Montreal aerospace industry is the unstable economic climate that has resulted from the group of politicians who are trying to take their province out of the Canadian federation.
Canada's aerospace industry, for example Bombardier of Montreal and Bell Helicopter of Mirabel, has graduated from being a one-product firm or branch plant to becoming full fledged industry players capable of manufacturing a full range of aircraft.
This growth has placed even greater pressure on federal research and development support and new aerospace project start ups cost hundreds of millions of dollars. This may not be a large amount of money by global aerospace industry standards which are heavily subsidized, but the Canadian government has heavy debt and heavy deficits and there are insufficient funds to go around.
As for Quebec, in the 1960s the Pearson Liberal government moved the Air Canada overhaul base from Winnipeg to Montreal for political reasons. Later the Progressive Conservative government gave the F-18 maintenance contract to Montreal for political reasons, despite the fact that Bristol Aerospace of Winnipeg had submitted the lowest bid and the best bid.
Regional balancing efforts are still apparent and even now industry rivals are positioning themselves for the best shot to bid for the new helicopters. In the human resources minister's riding, the consortium of Westland Group PLC and Agusta SPA is trying to sign up Bristol Aerospace's Winnipeg operation.
When proposals were placed before the Liberal cabinet to purchase the much needed helicopters, submarines and armoured vehicles, they were stalled when regional pressures came into play. The government must realize by now that it made a mistake in cancelling the EH-101 contract. It is now trying to do a balancing act to work out communications plans to announce which province will get what specific work from contracts for military hardware.
For example, the armoured personnel carrier contract going to General Motors of London, Ontario, has been balanced with the Montreal workshop being given the contract to refurbish the M-113 armoured personnel carriers, even though the whole contract might better have gone to New Brunswick. This is regional pork barrelling and represents the essence of old style politics. However, poor political decisions and poor planning must be corrected and the armoured personnel carrier purchase starts in this direction.
Canadian soldiers have for too long been placed at risk because of inadequate equipment. Our well trained, combat capable and highly respected peacekeepers have been sent to war zones outfitted with decades old equipment, some dating from the second world war.
Morale is affected because the troops feel abandoned by their senior leadership who seem to be more interested in pleasing their political masters than taking care of their troops. Defence budgets have been poorly managed. There has been gross waste at the top and a growing rift between the frontline troops and those behind desks at national defence headquarters.
That buck stops here in Parliament with government. Political decisions will re-equip our army with modern armoured vehicles, mine clearing equipment and provide enough helmets, socks or flak jackets to outfit all our soldiers. These equipment shortages point directly at this government and previous governments that
have carried on their defence commitments without spending the money to pay for them.
For example, our troops in the former Yugoslavia have had to leave behind helmets and other basic equipment so new replacement rotations would have these necessary tools. Our defence minister has said:
We will commit forces to such operations if suitable resources are available, and if our personnel can be appropriately armed and properly trained to carry out the task and make a significant contribution to the success of the mission.
Suitable resources have not been made available to protect the lives of Canadians and personnel have not been adequately armed. If Canada remains unwilling to commit the necessary resources in a timely fashion to protect and provide the needed resources for Canadian forces soldiers, we will be forced to rely on the heavy weapons of other countries or step back and let nations willing to spend the money to equip their troops do the job.
If the government plans to deploy a larger force on multilateral peacekeeping missions, our men and women will find themselves short of everything from modern night vision gear to anti-armour weapons, heavy machineguns, and updated communications equipment.
The procurements of new equipment such as the helicopters, armoured vehicles and submarines are vital replacements for aging equipment, not new capabilities. They meet only the minimum requirements to enable Canada to maintain a semblance of controlling its destiny.
Canada is bound by law and treaty to provide domestic security, collective defence, and participation in multilateral peacekeeping operations. Each role requires its own capabilities. If the Canadian forces are to do the tasks requested of them, they must have the necessary tools to perform those tasks.
Government has belatedly addressed the need for new and refurbished armoured vehicles and it seems there is enough money in the defence budget for submarines to replace the navy's aging Oberon class vessels, but cabinet is again dragging its feet, while affordable options available now could be lost. These replacement submarines could be picked up second hand from Britain at a bargain price, but the window of opportunity is closing quickly.
Over many years the Canadian navy has developed substantial experience in submarine and anti-submarine operations. Although the cold war may have ended, there are still over 700 submarines in service with more than 40 nations around the world and others are under construction. Submarines have become the weapon of choice for many small nations with limited defence budgets. It would seem shortsighted for Canada's defence forces to forgo the opportunity to retain and profit from their submarine expertise. Canada's three Oberon class patrol submarines, procured in the 1960s, are now reaching the end of their operational life, having become increasingly restricted and expensive to operate. Thus, Canada must now choose whether to retain or give up our submarine capability.
The Liberal government's cancellation of the 43 EH-101 shipborne and search and rescue helicopters because they were too costly means that it will be necessary to buy aircraft off the shelf in Europe or the United States. That means the government has sacrificed benefits to the Canadian economy the EH-101 would have created. The CH-133 Labradors, which have been in service since 1963, will finally be replaced with up to 15 new helicopters, type and capabilities unknown.
I have great difficulty in accepting the government's placing a bid for up to 15 helicopters. How many do we need? Do we need 10? Do we need 12? Do we need 14? Or do we need 15? If we are setting a dollar figure and saying we will buy as many as that figure will buy, that does not seem to be the way to do the job. We either need 15 helicopters or 14 or whatever the number is, and that is what we should bid for.
Government tenders will be issued early next year for bids on the new helicopters. The new fleet is to commence operations by December 1998, with all replacement helicopters in service by October 2001.
Without question, the government has had to reduce the capabilities of the replacement helicopters by at least 15 per cent to save on costs. These helicopters are to be used to save lives in emergency situations and under predictably severe conditions. I do not think the people who are on the receiving end of life saving efforts will appreciate that they are being served by a less than fully capable helicopter. By fully capably I mean all weather, icing and night capabilities.
Canada is still left without a shipborne helicopter capability to replace the troubled aging Sea Kings. In the 1970s DND began a long term plan to replace Sea Kings, which at that time had been in service for 15 years. It was understood that the Sea Kings would be kept in service until the 1990s. Finally, in 1986 Treasury Board gave approval to clear the way for industry to submit proposals on a replacement helicopter.
Aérospatiale of France and European Helicopter Industries, EHI, both submitted proposals. In August 1987 the EH-101 was chosen. In 1988 that contract was awarded.
The Sea King replacement package will be very nearly as expensive as the EH-101 would have been, but without any Canadian industrial participation and benefits to regions across Canada.
The government is well into its mandate and is attempting to put together a package that will look good to the public. It is announcing equipment purchases in bits and pieces to hide the real costs involved, talking of leasing and staggering new purchases in such a way as to camouflage the real costs.
The cost of cancelling the EH-101 may be as much as $680 million when termination penalties, sunk costs on the program, and the acquisition costs are considered. In fact others have estimated that the EH-101 cancellation costs will approach $1 billion.
British government auditors will review and certify claims for compensation submitted by EH Industries to the Canadian government. This would not be subject to negotiation, but behind the scenes EH Industries could receive favoured status in the new helicopter bidding in exchange for reduced compensation for the cancelled contract.
The government had already paid $336 million toward the EH-101 prior to its cancellation. The 1994 main estimates set aside a further $250 million for settlement payments. Thus, if these earmarked funds are spent the taxpayers will have paid $586 million without acquiring a single helicopter. This does not take into account the loss of work in high tech jobs, the direct and indirect compensation for Canadian industry, nor the military, which was left dealing with the many problems associated with our aging Sea Kings and Labradors.
Cancellation of this contract has left the frigates and the Tribal class destroyers lacking the capabilities of a new shipborne helicopter.
The government promised in the defence white paper that it would immediately begin to identify options and plans to put into service a new, affordable replacement shipborne helicopter by the end of the decade.
The price tag attached to the EH-101 purchase included approximately $1.6 billion to $2 billion for the training of air crew, maintenance, spare parts, operating expenses, and administration. It was an all-inclusive cost program, unlike any that had been run before it, to my knowledge.
The 1992-93 fixed cost for the EH-101 program was $4.4 billion, but a figure frequently used by the media and by the Liberal government was $5.8 billion, which was the inflation adjusted projected cost for the end of the program and not a true reflection of the actual costs.
The EH-101 program was spread over 13 years and its life expectancy was 30 to 40 years. Many alternative off the shelf aircraft have only light icing capability, while the EH-101 was a true all weather aircraft.
One of the key factors that led DND to select the EH-101 was that it could replace both the Sea King and the Labrador, keeping the costs of the new shipborne aircraft as low as possible. Replacing both the Sea King and the Labrador with one aircraft gave Canada the opportunity to lower the production and long term maintenance costs. One aircraft means lower production costs per airframe, one spares chain, a single maintenance schedule, and a single pilot training program. Government has basically thrown the baby out with the bath water because of ill-informed politically based election strategy.
Now it is all smoke and mirrors. Contracts and announcements are dragged out while the Canadian forces wait on their political masters to determine their fate. Time is being frittered away. Government must move ahead immediately, either to replace aging equipment or reduce overseas commitments and obligations.
Notwithstanding the foregoing, we believe that in defence spending, as in other spending, the raison d'être should be the best equipment at the best price. That means that we do not get into the defence department supporting regional development. We buy defence equipment based on defence needs and defence dollars are spent on defence. Once we get into trying to prop up an area or balance that prop with another prop elsewhere, the defence department carries disproportionate costs, which do not accurately reflect the money that is to be spent on the defence budget.
