THE WEST BLOCK
Episode 14, Season 2
Sunday, December 9, 2012
Host: Tom Clark
Guests: Thomas Mulcair, Alan Williams, Ian Lee, George Baker, Jason Kenney
Location: Ottawa
Tom Clark:
Welcome to The West Block from the nation’s capital on this Sunday, December the 9th; I’m Tom Clark.
Well coming up on today’s show, Canada approves China’s takeover of Nexen. NDP Leader Thomas Mulcair is here with his first public reaction. What will a $45 billion dollar price tag for the F-35’s mean for their future and is the Canada-US border now the new target for illegal immigrants? We talk to immigration minister Jason Kenney.
But first, late last week Prime Minster Stephen Harper approved two controversial takeovers by Asian state owned enterprises of Canadian owned oil companies, but at the same time he said, “He will block any further acquisitions in the oil sands by government owned firms”, except what he said, “under exceptional circumstances”.
So what does this whole deal mean to Canada? Well we go to Montreal now to speak with the leader of the opposition, Tom Mulcair. Mr. Mulcair welcome to the program again.
Thomas Mulcair:
Thank you very much Tom.
Tom Clark:
Prime Minister Harper says this is the last time that a foreign state owned enterprise will get a stake in the Canadian oil sands. Is that good enough for you?
Thomas Mulcair:
No because we still don’t know what the rules are and that’s been the problem. Two years ago they acquiesced and a motion that we had made to set clearer standards for foreign takeovers. The Investment Act is not clear right now and what we had on Friday was two announcements but still with no criteria. That’s not good for the Canadian economy because foreign investors don’t know what the rules are and it’s not good for Canadians because we don’t know what the government is going to approve in the future. On the one hand he says that these foreign takeovers, under the current law are of a net benefit to Canada but doesn’t say how. Honestly Tom, the only clear net benefit is to Nexen shareholders in Mr. Harper’s oil patch and I think it has as much to do with that as anything else.
Tom Clark:
Well correct me if I’m wrong, but I think that in the past you said that you would not have necessarily approved the CNOOC takeover of Nexen but if we could advance the clock here; 2015 in a different world and there’s a Tom Mulcair administration at 24 Sussex Drive, what would you do? Would you change this policy now of saying, only under exceptional circumstances can state owned enterprises come into the oil sands?
Thomas Mulcair:
Well there are state owned enterprises and state owned enterprises. The problem with China of course is it’s a communist country and a state owned enterprise is actually China. So China has now bought a stake in the oil sands and don’t forget they have to be treated under the FIPA; the Foreign Investor Protection Agreement that the Conservatives have just signed with China. Now they’re allowed to bid on whatever they want in terms of oil leases and we can’t stop them, so they can buy up whatever they want and control as much as they want. That’s the underlying problem. The two have to be looked at together. We would have never done this sort of thing without consulting Canadians, without coming up with clear rules for foreign investors. That’s fair for everyone but in every case where we’ve seen these big foreign takeovers, especially in the resource sector; we saw it with Vale, we saw it with Xstrada, we saw it with Rio Tinto Alcan. There were lockouts. People’s working conditions were lowered. We see what the strong tendency is here for foreign companies to come in and remove rights here in Canada and it’s something that also has to be discussed in every one of these cases.
Tom Clark:
What about other strategic assets in this country, would you protect them as well? I’m thinking for example, the telecom industry, BC shale, gas, hydroelectricity, why just the oil sands?
Thomas Mulcair:
You have to define what the strategic asset is. Don’t forget the first time we heard that term was when BHP Billiton tried to take over Potash Corporation. Strong reaction in Saskatchewan, by the way I agree with the refusal to allow the takeover of Potash Corporation but then the Conservatives used for the first time a term that’s not in the Investment Canada Act, which is strategic asset. So if that’s going to be a term we’re going to use, it has to be in the law. People have to know what the clear rules are. Again, they’re making it up as they go along because even on Friday Mr. Harper said, as you correctly quoted before, well we won’t allow state owned enterprises to takeover Canadian businesses anymore in the oil sector, except in exceptional circumstances. Well what does that mean, when it’s Friday? Is that an exceptional circumstance when it’s 11:57 at night? That’s what we’ve been seeing in these decisions so you’ve got to come up with clear rules. That’s good for the economy. That’s good for foreign investment.
Tom Clark:
Let me take you to the other major story of the week and that is what’s coming up tomorrow, the F-35 report, the KPMG report is coming down. We basically already know what’s in it because the government has leaked most of the information. But what it comes down to is, that it’s going to cost this country about a billion dollars a year to have a fighter jet fleet. Is that an acceptable amount of money to you?
Thomas Mulcair:
The problem in this case is that they never proceeded as prudent public administrators. There are rules Tom that exist to protect the public money. And in this case, they’ve always used the half lie. They say well no money has been spent on acquisition. Well of course no money has been spent on acquisition, the plane doesn’t exist yet but you’ve spent $700 million dollars so far on the process. Seven hundred million dollars by the way is the exact sum of money required to lift every senior in Canada above the poverty line. That’s exactly how much it would take. So they are pretending that that’s not even real money. It is real money. You’re right, I mean it’s going to cost a certain amount to keep a fighter fleet and we need one. It’s part of our national defence but you proceed in the normal way of public administration. You say exactly what your needs are. For example, it has to be able to work in the arctic. Who knew the F-35 can’t work in the arctic. It has to meet Canada’s needs. We have to define what those are and then the lowest conforming bidder gets the contract. Who knew? That’s what public administration is about. The Conservatives talk a good game when it comes to public administration, public management, public money, but they’re abysmal failures when it actually comes to doing the job. And that’s what the F-35 debacle is about more than anything else. It’s a fiasco of public management and the Conservatives are going to wear this one for a long time.
Tom Clark:
So we know that they are going to be looking at alternatives but from your point of view, should the F-35 itself be off the table? Should we be only looking now at alternatives to the F-35?
Thomas Mulcair:
You define your need, you define your price range, and then you go to the lowest conforming bidder. I’m not saying anything should be off the table, that’s the mistake the Conservatives made. Even when they got caught in their series of lies the first time and they were derisive and dismissive and they were mocking anybody who dared even question them. And we didn’t know anything about this, how could we even ask questions of a great military genius like Peter MacKay. Now they’re going to have to wear it. Of course we should be looking at other options but if the F-35 can meet those criteria, that’s too but you have to say what they are. They’ve never even done that basic exercise. That’s the real problem here. We have the CF-18’s right now. There’s something called the super…that’s the Hornet. There’s something called the Super Hornet, it’s very close and a lot of the preparatory work is already done. We’ve got teams that are already prepared to do that. That would be one of the first ones I’d look at. There are other planes in the world Tom that could be looked at, but again if we haven’t even defined what our own needs are, how are you going to be able to say that you’ve got the lowest conforming bidder?
Tom Clark:
Okay, NDP Leader Tom Mulcair thanks very much for joining us today. Good to have you on the program.
Get breaking National news
Thomas Mulcair:
Thanks Tom.
Tom Clark:
Well let’s just go back for a minute to the decision to allow the Chinese oil company to buy Nexen in Calgary. Before that deal was announced, there were a lot of security concerns raised in the United States about this, but former US Ambassador to Canada, Gordon Giffen says that the takeover probably won’t hurt the Canada-US relationship. Take a listen:
Gordon Giffen:
“I don’t think it poses a big challenge for Canada-US relations. Put this in context, the biggest lender to the United States of America right now in the public sector is the Government of China so we can’t get too worked up about them spending $15 billion dollars in Canada”.
Tom Clark:
Well coming up next, the new sky high price for the F-35’s. Is the jet program about to be diverted? One of the people, who were behind the deal at National Defence when all this started, is coming up next.
Break
Tom Clark:
This week the government will release another review of the troubled F-35 program and the Conservatives have already leaked the results. . The cost will be pegged at just more than $45 billion dollars over the next forty years. We also know the government will open the door to other contenders, meaning that the F-35’s are not dead yet but certainly they’re in a lot of trouble. How did we get here? Here is your weekly West Block Primer:
When Defence Minister Peter MacKay leapt into a mock cockpit of the F-35 for a photo op back in 2010, he said this was the right plane for the right price. Well it turns out it could be neither. The government insisted that the cost of buying and maintaining a fleet of 65 of these planes would be $14.7 billion dollars. It even fought the 2011 election campaign on that price claiming that it was a bargain. But not everyone was buying that. In 2011, the Parliamentary Budget Officer peered into the plane, kicked the tires and came up with a price tag of almost $30 billion dollars over a 30 year period. The government snorted that Kevin Page didn’t know what he was talking about. Well then the Auditor General decided to have a look and he found that the government had a different set of numbers that put the price at $25 billion over 20 years. The government knew it was knee deep in something and so it handed the whole purchase to another minister who ordered another audit, this time by KPMG. Government sources tell us that the price tag will be just more than a whopping $45 billion dollars. That’s over a 40 year period which KPMG says is the right timeframe to look at. It’s a far cry from the door crasher special.
Tom Clark:
Well joining me now is Alan Williams, the Former Assistant Deputy Minister of National Defence, in charge of procurement and material. Mr. Williams thanks very much for being here.
Alan Williams:
A pleasure being here.
Tom Clark:
Back in 2002, you were the one who signed Canada into the second phase of the F-35 program. With what you know now, is the F-35 dead?
Alan Williams:
I would hope not. Frankly, it may turn out to be the right aircraft for Canada. My concern has always been that to sole source it to the F-35 before it’s operational, without knowing the price made no sense, neither for the military nor for the Canadian taxpayers.
Tom Clark:
Now are you surprised at all that the numbers coming out from KPMG were told by a very senior government source that that number is going to be somewhere between $45 billion and $50 billion, if you cost it over 40 years. Sticker shock is the word that comes to mind for a lot of people, does it to you?
Alan Williams:
No, in fact, back in May, I wrote an article where I estimated the cost to between I think $41.7 and $47.6; something of that sort.
Tom Clark:
That’s pretty bang on.
Alan Williams:
It’s pretty bang on and frankly, I don’t think the governments surprised by it either. I mean they’re not naïve. These numbers all come from the same source; the Pentagon’s Annual Selected Acquisition Report with costs and so anybody doing any kind of research would have come up to the same conclusion that the price to…the total cost to buy, maintain and operate for roughly thirty years is in that range, so I don’t think they were surprised by it either.
Tom Clark;
The other thing that we have been told is that the statement of requirements, that sort of bible of what a manufacturer has to meet in order to sell this plane to the Canadian government is going to be changed. And the key thing that’s going to be changed there is stealth; the requirement for stealth is now not part of the statement of requirements. Given that, does that open up the door to all sorts of other contenders?
Alan Williams:
Well it certainly does but I would hope that the notion that it’s off the table isn’t accurate either. I mean what we should be doing instead of saying that stealth is a mandatory feature we should be making it what we call a rated feature. So the more “stealthiness” you have the better product you can provide us, the more points we will give. The better your technical bid, the better chance that you have to win a competition, given the price and everything else. So stealthiness is probably still a highly desirable factor to have but it shouldn’t be a past fail because then you know that you’ve restricted it to one potential aircraft although even today, if you were to map the F-35 against the existing statement of requirements, it would fail. It would fail because the statement of requirements was written in anticipation of some of the technical developments which so far have not proven to be achievable. So it too would fail today against the current statement of requirements regarding stealth.
Tom Clark:
From what you know, are there other planes out there, fighter jets out there now that would meet our needs other than the F-35?
Alan Williams:
Well again, a question of how you define our needs. Certainly, I think most people are familiar with the handful of products out there, whether it’s the Super Hornet or the Typhoon or the Gripen or the Raphael. These are all jet aircraft used by a lot of our allies in a lot of situations. They each have pros and cons and benefits and they each have different associated costs with it. And that’s why right from the beginning, all that I have said is; let’s go through the front door on the process. Let’s do an open and fair statement of requirements, let’s put it out to industry, let’s get all the bids, let’s evaluate them fairly and pick the one that has the best combination of technical and price to meet our needs however they are defined.
Tom Clark
A lot of people, including you saying that maybe should have been done at the beginning.
Alan Williams:
All along it should have been done. It should have done two years ago or 18 months ago or 12 months ago, or six months ago but now is okay too. You know, if we do it today, that’s better than not doing it today. And I think that would be great. Within two years we can select whichever aircraft we want and then we go ahead. And depending on which one it is, move forward.
Tom Clark:
Okay so that the process going ahead is that there is a committee of four people who are going to look at options that are out there, and then report back to the government. Is that a step forward that we’re now taking a look at these other aircraft?
Alan Williams:
To me that’s a red herring. I mean everybody knows in essence the kind of information through an options analysis. The problem with an options analysis, it gives you kind of a reflection of what’s out there. You can get a lot of that through the internet. You can get a lot of that by going to the companies but what you can’t get is a top sensitive secret data that they only could submit through a competitive process. So frankly, it’s useful information but it’s not anywhere close to the kind of rigour you need in order to assess which one is best. And of course, you have to map that against your criteria; your statement of requirements and how much weight you give for each kind of capability that you require. And you have to be careful because even when open up the statement of requirements and no longer make stealth a mandatory, again you can still manipulate the process by how much weight you provide to each kind of component.
Tom Clark:
Final question is this, that if we’re looking at a price tag over forty years of between $45 and $50 billion dollars for the F-35, would any of these other competitors be substantially cheaper than that or are we just going to have to learn to live with this price tag?
Alan Williams:
If you talk to them they’ll probably say they can do it a lot cheaper. And my answer is, prove it. Let’s have a competition. Provide your technical specs, provide your price, sharpen your pencils and that’s how we will get the best deal.
Tom Clark:
Alan Williams thanks very much for being here. Appreciate it.
Alan Williams:
It’s a pleasure. Thank you.
Tom Clark:
Well we also asked our favourite debaters: Senator George Baker and Professor Ian Lee to weigh in on all of this and here’s just a bit of what they had to say:
Ian Lee:
Big ticket procurement is very complex, very difficult, very challenging and it confuses the best minds. I mean some are using 20 year estimates, some are using 30, some are using 40, some are using just the capital costs, some are saying no, no, no, you have got to throw in the gasoline you know and you got to throw in the repair bill and that is where a lot of the confusion is coming to Canadians. When I go and buy a car, when I buy a Honda Civic for $20,000, I don’t have to factor in you know the gas and the insurance and the depreciation, but some of the opposition people in your party are confusing Canadians by throwing in all these numbers to confuse them when it’s a billion dollars a year, all in, to protect our country with an air force. That’s a bargain when you consider we’re the second largest country on the planet Earth, occupying 25 percent of the Northern Hemisphere.
George Baker:
You’re forgetting that this was this plane and no other plane. This was untendered. There was tender call for this. You know we had the Associate Minister of National Defence claim, we’re going to go ahead with this deal; we’re not going to back down. We are on a crusade. Those were his words immediately after the announcement in the first place. And then the prime minister turned around and said, on the record, to cancel this project would be irresponsible.
Tom Clark:
Well you are going to want to head to our website to check out the compete Baker-Lee Debate. That’s http://www.thewestblock.ca.
Coming up next, we talk to Immigration Minister Jason Kenney about illegal border crossings. Stay tuned.
Break
Tom Clark:
Welcome back to the West Block. Last week, Immigration Minister Jason Kenney revealed that there is a serious and growing breach in our undefended border with the United States. At this border crossing in Stanstead Quebec, 282 people have illegally entered the country and made refugee claims. Now their journey is worthy of a Hollywood movie. They came from Romania, travelled through Mexico, into the United States and then literally crashed through a sleepy border crossing here in Quebec where there they made refugee claims.
And joining us now to talk about it is Immigration Minister, Jason Kenney. Minister good to have you on the show.
Jason Kenney:
Thanks very much Tom.
Tom Clark:
Of the….let’s just get an update on those who did cross, the story that you were telling, 85 came across. How many of them have we caught so far? How many are in custody?
Jason Kenney:
So far 40 that we detained, but actually there were more than 85 altogether who came this route from Romania through Mexico and the United States; we designated five of the arrivals that happened over the course of the past eight months or so. These are people who came from one village in Romania. They flew to typically Cancun in Mexico then hired smugglers to bring them across the US border, often were detained by the American authorities then bailed out for thousands of dollars…bailed out of immigration detention, rented vehicles, drove north to one specific Canadian border crossing, that’s Stanstead Quebec, typically raced across the south bound lane going north and then eventually were detained by Canadian police. They said that they were refugees, the got released, went to Toronto and then subsequently many of them have become involved in organized criminality such as distraction thefts.
Tom Clark:
It’s an incredible story but just paint a picture for me of that border crossing in Stanstead that they went to. Is this sort of part of the great undefended border that is just forest and trees?
Jason Kenney:
Well it’s a…look at the end of the day, this is a 6,500 kilometer long unguarded border that does not have a fence on it and we don’t want to build a fence. So people who are determined who want to come up from the United States are inevitably going to find a way to do so. Stanstead’s particularly complicated because the border cuts right through a 19th century town and there are houses and buildings that the town library; the front door is on American side and the back door is on the Canadian side. So we’ve added resources to the Border Services Agency. We’ve increased the number of frontline personnel. There are about 26 percent additional RCMP resources but at the end of the day unless you build a wall through a town like that, there are going to be some people able to sneak through.
Tom Clark:
And as you say, that’s just one part of our undefended border. I mean there are big swaths out in Western Canada where it’s just wilderness basically.
Jason Kenney:
Yeah, if they weren’t coming through the town they could just get out of a car and walk through a forest or a farmer’s field. So at the end of the day, we cannot create a sort of walled border with the United States. No one wants…
Tom Clark:
This is not the US-Mexican border problem.
Jason Kenney:
This is not that problem at all but we do need to create disincentives for human smugglers who seek to target Canada in this very sophisticated way and that’s why we brought in the Protecting Canada’s Immigration System Act; the first application of which was against these 85 smuggled illegal migrants last week.
Tom Clark:
Let me take you forward because under the perimeter security deal that we’re working with the United States on, there was one section of that that dealt specifically with refugees and how we treat them. And by next year there’s supposed to be a new agreement beyond the third…
Jason Kenney:
Safe third country.
Tom Clark:
Safe third country status. Where are we on that? How far and what is likely to be that?
Jason Kenney:
Well the reason why these folks crashed across the border and didn’t stop to register their refugee claim at the port of entry is because they would have been turned back at the port of entry because of this agreement where we say, look if you were in the states, you come north to seek asylum, you should be seeking protection in the United States. It’s a rights respecting country, a signatory to the refugee convention and we don’t encourage or accept asylum shopping. That’s the principle of the law but by crashing across the border getting inland, they’re then exempt from that safe third country agreement. So we’ve asked the United States to amend this. We’d like to address that. So far they have not agreed to do so. Again, that’s why we’ve brought in tougher laws to deter people from coming to Canada through what are dangerous human smuggling operations. We want to offer protection to bonafide refugees but to stop smuggling syndicates from trying to abuse our generosity.
Tom Clark:
But to be clear, what you’re saying is that we’re trying to convince the Americans that if somebody crashes across the border that they could be still treated as if they were in the United States, that’s what you want. And that’s what the US is not agreeing to yet.
Jason Kenney:
Not they’re not, and they’ve said they want no amendments to the Safe Third Country Agreement. Quite frankly, 90 percent of the people who present themselves at a land border crossing with the United States to make asylum claims end up being exempted from that agreement because of a whole lot of exceptions. So the agreements become a bit of a paper tiger unfortunately and that’s why we have to find other ways to deter people who are not bonafied refugees but are trying to abuse our generosity from doing so.
Tom Clark:
Jason Kenney, Minister of Immigration, thanks very much for being here.
Jason Kenney:
Thank you Tom.
Tom Clark:
Well that’s our show for this week. For all of our extended interviews, go to our website at thewestblock.ca and tell us what you think. We read all of your feedback, whether it’s via Twitter, Facebook or snail mail but we do love hearing from you.
Well Parliament is back tomorrow and the F-35’s will be front and centre in the House. Thanks for watching. I’m Tom Clark, have a great week and we’ll see you next Sunday right here.
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