OTTAWA – Some would describe it as the battle of the bean-counters.
But the long-standing disagreement between National Defence and the auditor general over whether the salaries of soldiers and other operational expenses should be included in the cost estimate for F-35 fighter jets and other purchases threatens to blow the roof off the Harper government’s carefully orchestrated military spending plans.
The Conservative wish-list of defence purchases, including the controversial F-35 stealth fighter, was expected to cost taxpayers $115 billion over the next 16 years, according to internal documents obtained by The Canadian Press under access to information laws.
That substantial figure could rocket into the stratosphere, propelled by Defence Minister Peter MacKay’s grudging acceptance of both Auditor General Michael Ferguson and opposition demands to account for ordinary expenses, which the military incurs regardless of what equipment is purchased.
Both the opposition parties argued Wednesday that such transparency is essential.
Liberal House leader Marc Garneau said Canadians expect to know the full-cost of whatever the government buys and that the argument about operational expenses versus capital acquisitions is a red herring.
“I don’t think it’s a problem of terminology,” he said. “It’s unacceptable to try and throw fog on this thing by saying we’re talking about apples and oranges.”
But the Conservatives point out that when the Liberals were in power none of their defence announcements included such mundane expenses. Indeed, the Liberals went to great lengths to keep such figures out of the debate over the use of Defence Department Challenger jets when former auditor general Sheila Fraser blasted their use in 2003.
The Defence Department was accused last week of hiding the truth. Auditor General Michael Ferguson found that, had operational costs been included as per government rules, the real cost of the F-35 program would be more like $24.7 billion, instead of the reported $14.7 billion.
NDP defence critic David Christopherson said federal Treasury Board guidelines stipulate that such figures should be spelled out for public consumption.
“It’s not that the $24.7 billion dollar figure was wrong. It was that (the Tories) didn’t want that number out there because then they would have to defend it,” said Christopherson.
MacKay said Tuesday that from now on the Defence Department would clearly disclose those numbers in future procurements – a potentially mind-blowing proposition for military planners who will be asked to project the costs of salaries and fuel decades into the future.
Internal Defence documents show the Conservatives plan to spend just over $51.4 billion on capital purchases between now and 2028 on everything from new fighter jets and navy destroyers to trucks and tanks.
An additional $63.6 billion will be required to maintain the equipment. The estimate, penned by the vice chief of defence staff last summer, does not include operation expenses. The briefing note to MacKay underscores the perils of trying to forecast numbers 20 years or more into the future.
“Equipment once delivered must of course be supported,” said the Aug. 12, 2011 document. “Expected sustainment costs are developed by (the assistant deputy minister) based on actual costs incurred to support similar fleets from industry and allies and projected inflation. Application of this information to new equipment, which is normally more capable and technologically complex than the equipment it replaces, is not an exact science and estimates are revised as better information and experience are available.”
A former senior defence official said the political fire storm surrounding the stealth fighter is not an accounting issue, but rather one of communication.
“We’re talking about the public saying, ‘gimme the total cost and I’ll come to my own conclusions,'” said Alan Williams, who ran the Defence Department’s procurement branch until 2005.
Williams, a vocal critic of the F-35 project, also pointed out that the memo was signed by a military officer and cited that as another example of how the civilian administration has lost control over defence.
“When we made procurement presentations to cabinet, or cabinet committees, no military person was present,” he said. “They were only allowed to talk about their requirements. I don’t know who’s accountable for what in the process any more.”
Both opposition parties demanded accountability Wednesday, but differed wildly on how to define it. The Liberals want both MacKay and Prime Minister Stephen Harper to step down.
Christopherson was more vague, saying only the NDP wants the prime minister to “do the right thing.” He didn’t spell out what that might be.
The Liberals were blistering and personal in their attack and pointed to a flub in Halifax on Tuesday where MacKay referenced the wrong statistical table in trying to make his case over the conflicting numbers.
Garneau says it speaks to minister’s credibility, declaring him either incompetent or “not too bright.”
When it was first released in 2008, the entire Conservative defence spending plan was estimated to cost a total of $490 billion over 50 years.
At the time, a retired military officer, writing in the respected Canadian Military Journal, warned the government that its strategy had to be defended in public as affordable and reasonable over the long term.
“The department’s challenge continues to be its explanation to Canadians on an ongoing basis that ensures the taxpayers’ investment is being wisely spent,” wrote retired major Gerry Madigan, who served in defence finance and was the comptroller for the Canadian military operation during the first Gulf War.
“Waste will be severely criticized. Thus, stewardship of public resources, and accountability for results, will be keys to sustaining the taxpayers’ consensus, given the sacrifice that is being asked of Canadians.”