NDVA Committee Meeting

STANDING COMMITTEE ON NATIONAL DEFENCE AND VETERANS AFFAIRS

COMITÉ PERMANENT DE LA DÉFENSE NATIONALE ET DES ANCIENS COMBATTANTS

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 18, 1997

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[English]

The Chairman (Mr. Robert Bertrand (Pontiac—Gatineau—Labelle, Lib.)): Order, please.

I would like to welcome you to our committee again, Mr. Minister. Before giving you the floor for some brief comments and the introduction of the witnesses, I would like to go over the timing for questions with everybody.

First we go with the Reform for 10 minutes. Then we go to the Bloc for 10 minutes. Then we go to the Liberals for 10 minutes. Then we go to the other two parties for 10 minutes. After the first session is over, we go back to what we had before, 5 minutes each.

Is that agreeable to everybody?

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Some hon. members: Agreed.

The Chairman: Thank you.

Mr. Minister.

Hon. Arthur C. Eggleton (Minister of National Defence, Lib.): Thank you very much.

[Translation]

It is a pleasure to be back before this Committee.

[English]

I'm here today with Louise Fréchette, Deputy Minister of National Defence, and General Kinsman, Assistant Deputy Minister, Personnel. In a moment I will have here our Chief of Defence Staff, General Baril.

For the Canadian Forces, a lot has happened since the 1997-98 estimates were prepared. To put it simply, the forces have been going about their business as one would expect.

For example, the frigate HMCS Regina has completed a successful six-month patrol in the Arabian Sea to enforce the UN embargo against Iraq.

Our peacekeepers have continued their mission to assist in the preservation of a secure and stable environment in Haiti.

In Bosnia, members of the Canadian Forces have been working alongside our NATO allies as part of the stabilization force to implement the Dayton peace accord. As you may have heard yesterday, our CF-18s returned home after enforcing the no-fly zone over Bosnia as part of that mission.

As well, since we've prepared those estimates the forces have performed outstanding work, Mr. Chairman and members of the committee, helping Canadians during the Manitoba flood.

[Translation]

The Forces are committed to ensuring that they can carry out their business in the future.

[English]

For example, the navy will continue to protect our national interests through coastal surveillance and by supporting other government departments in enforcing Canada's maritime jurisdiction. They'll contribute to collective defence by providing ships to NATO. They will promote Canada's foreign policy objectives through participation in international exercise and through visits to international ports, which, I might add, also helps us in terms of export of some high-tech aerospace and communications equipment.

The air force will continue to contribute to the defence of Canada and North America, with our partners, the United States, under NORAD. They will participate in multinational and joint operations under the auspices of the UN and NATO. They will participate in arms control and other confidence-building measures.

The army will continue to defend our sovereignty by providing surveillance capability, maintaining immediate reaction units, contributing to domestic humanitarian assistance and of course disaster relief where necessary, and supporting other government departments.

Internationally they will remain fully prepared to carry out the wide range of peace support and other operations Canada and the world have grown to expect from them.

Mr. Chairman, when I first appeared here three weeks ago I outlined four priorities that I set for me, the Canadian Forces, and the Department of National Defence. First, as I indicated, I wanted to address issues that affect the quality of life and the social and economic issues for our force members and their families.

Second, I want to continue the process of reform and institutional change that will assist in the restoration of the contract of trust between the forces and the Canadian public.

Third, I want to see the forces get the best equipment we can afford to give them—the kind of tools they need to do the job effectively.

Fourth, I want to improve communications both within the forces and the department and with the Canadian public to enhance openness and transparency.

When I was here I concentrated on the quality of life issues. Today I want to briefly mention the other three priorities in a little more depth.

First, the process of reform. We will continue to change the way in which we do business to ensure that we get the best possible value for our defence dollars. We've come a long way, but we're not going to rest. For the good of this vital national institution and for the good of the dedicated men and women who serve in the forces, we will continue with these changes.

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[Translation]

We will continue on the road to becoming more effective and efficient, and we will continue with our agenda of institutional changes and reform.

[English]

Although there is still work ahead of us, we are putting in place many initiatives to further the progress of reform. We understand the need for continual change in the way we do business, to cut the number of support personnel, to downsize and reduce the number of headquarters, to rationalize infrastructure, and to improve management practices and technology. The overriding purpose is to reduce the cost of everything we do, while maintaining our operational capability.

As demonstrated by the 1997-98 estimates and the departmental performance report that was issued for the period ending March 31, 1997, we are well on the way to meeting our goals. In some cases we have exceeded them. The 1997-98 estimates reflect a planned spending level of $9.9 billion, a reduction of over $2 billion since 1994.

We are in a period of perpetual, ongoing change in order to find the most cost-effective way of doing our work. We've made excellent progress, and the department is on target for achieving the military and civilian personnel levels set in the 1994 defence white paper. We have reduced our military personnel from 88,800 in 1989, to just over 61,000 today. We have reduced civilian positions from 36,000 in 1989, to just over 21,000 today. We will have no problem in meeting our targets of 60,000 regular military, 20,000 civilians, and 30,000 reservists.

We have reduced the number of headquarters from 18 to 12. A new command and control structure is in place. Further alternative service delivery options are being explored. A blueprint for restructuring of the reserves has been unveiled. Improvements in management and information technology have been made.

Let me mention one initiative that demonstrates how we are improving the way we do business, and that is the NATO flying training program in Canada. Under this alternate service delivery, or ASD, initiative, our industry partners will carry out most of the functions now handled by our defence organization, but Canadian Forces and NATO pilots will provide the flight instruction.

We will see substantial benefits from this arrangement. The project will significantly reduce the cost of training military pilots. It will also mean almost $1 billion in direct industrial benefits for Canada, including over 5,600 person-years of work. This work will be in long-term jobs, primarily in high-technology industries. In fact, we're estimating that we'll save at least $200 million in this program over the next 20 years. This is just one example of how we are doing business differently at the Department of National Defence and in the Canadian Forces.

We have taken other significant steps down to road to reform, as outlined in our comprehensive response to the Somalia commission of inquiry, entitled A Commitment to Change. We have demonstrated our commitment by accepting, either in whole or in part, 82% of the recommendations of the Somalia commission. Those that we didn't accept, we're committed to addressing through other means.

Shortly, we will propose amendments to the National Defence Act to allow for comprehensive changes to the military justice system. We will appoint an ombudsman to enhance fairness within the department and the forces. And we have improved the means by which complaints can be dealt with by proposing alternate dispute resolution mechanisms, by improving the internal grievance procedures, and by reducing the number of levels involved to speed up decision-making.

As you know, in addition to the Somalia inquiry, we currently have recommendations from four other public reports dealing with everything from leadership and management—which was particularly the theme that my predecessor put in a report to the Prime Minister—to accountability, the reserves, military justice, recruitment and training.

We have no intention of allowing these reports to collect dust on a shelf, Mr. Chairman. Canadians have every right to expect that we will make the changes that need to be made, and that we will do so in a timely fashion. We have introduced an independent committee that will monitor the implementation of change in the Canadian Forces and the Department of National Defence. A group of distinguished Canadians, under the leadership of the Hon. Willard Estey, will act as a window through which Canadians will be able to see that changes are in fact being made.

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Another of my priorities is to provide the men and women of the Canadian Forces with the best equipment that we can afford. Given the pace of technological change, we need to continue to adjust to remain effective. If we want the forces to do their job effectively, we cannot expect our soldiers, our sailors and our air personnel to operate weapon systems that are outdated or at the end of their usefulness.

The process of re-equipping our forces is a continuous one. The estimates detail many projects now under way, and which will enhance the ability of our men and women in uniform to carry out their vital missions. We expect to announce our decision shortly with respect to search and rescue helicopters, and we have other difficult decisions ahead. As expressed many times, the government understands the importance of decisions regarding maritime helicopters and the Upholder submarines. We will follow through on our plans to purchase a new shipborne helicopter to replace the Sea King. We will select an aircraft that is robust, capable and, again, affordable. We soon hope to be able to announce a final decision on Upholder submarines.

My final priority is to improve communications within DND and the forces, and with the public, of course. I understand that the military operates and must operate in an environment of discipline, but we need not and cannot sacrifice effectiveness to bureaucracy or responsiveness to red tape.

We also need to rethink how we interact with the public. Abraham Lincoln once said, “With public sentiment, nothing can fail. Without it, nothing can succeed.” Well, the more people know about us, the better. There's no place for a bunker mentality. In this regard, this committee, various defence organizations, and the media can be of great assistance in helping us to get our message out.

Canadians need to see more of the humanitarian work that forces personnel do, such as their unrelenting assistance during the Manitoba and the Saguenay floods. They need to see how our troops in Bosnia and Haiti are helping to restore communities by, for example, helping to rebuild schools and playgrounds, by volunteering time and effort to do so. But Canadians also need to see more of the day-in and day-out activities of the forces patrolling the streets of Port au Prince and Bihac, enforcing no fly zones over Bosnia and maritime embargoes in the Arabian Sea, protecting our fisheries, intercepting the flow of illegal drugs. And they need to know about the endless training that allows the forces to be ready to respond to the unthinkable, the preparation that enables them to carry out their missions with consistent success.

We must remind Canadians not only of our successes, but the dedication, the professionalism and the commitment that lie behind them. Continuing the process of reform, providing the right equipment to do the job, ensuring a more open and transparent military, and taking care of the men and women of the forces and their families—these are my priorities.

I'm under no illusion about their difficulty. It'll require a strong commitment from all of us, but we must not fail. Indeed, we cannot fail. Just as we rely on the men and women of the Canadian Forces to do so much on our behalf, they rely upon us to do right by them. We should not let them down.

Thank you very much, Mr. Chairman.

[Translation]

The Chairman: Thank you very much, Mr. Minister. We will now go to questions starting with the Reform Party. Mr. Hanger, you have 10 minutes.

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[English]

Mr. Art Hanger (Calgary Northeast, Ref.): Thank you, Mr. Minister, for appearing before the committee. I've actually been waiting for this day for a while. I think a number of questions have arisen over the budget cuts that have come about through the military.

One of the main thoughts and concerns I've had is about the level of pay our military men and women are receiving right now. I get the distinct impression that this has been going on for a period of time much longer than what they even imagined would be possible, and it's certainly a morale problem in itself.

On a recent trip to one of the bases here in Canada, I was informed by the commanding officers that there were a number of soldiers actually in a food line because of certain things that happened to their personal budgets. They ended up having emergencies to take care of, and the only way they could supplement their situation was by going to food banks to get food.

I could understand it if it was just a handful of people, but it's not; it's more than a handful. So I would suggest that this is probably a good reason for low morale.

The other point that had come up too is the fact that there wasn't any hesitation to make sure that the upper ranks were given bonuses. They were given increases—substantial ones, I might add. Some were as high as $4,000 to $5,000. Yet at the lower end of the scale, the troops, the rank and file, seem to be tossed off to the side.

I'm curious how you're going to deal with that particular point, Mr. Minister, especially with the rank and file. What are you going to tell them?

Mr. Arthur Eggleton: I agree that the level of pay should be higher. We are moving in this area. There are two programs. One will provide for an economic increase for members of the forces. That was to actually be put into effect as of last April 1.

In that connection, we are waiting for public service sector union negotiations to be completed. The policy of the government through the Treasury Board is to link the public service wages with those of the Canadian Forces. We are actually behind public service salaries.

So there are two programs. One is to catch up to the public service wage levels. The other would be an economic increase that will be commensurate with what is determined as a result of negotiations with the public service sector unions.

As I indicated the last time I was here, I'm hoping that while there may not be completion of those union negotiations in the next little while, hopefully we could put into effect an interim increase by the end of this year. We're looking at the possibility of that matter.

Meanwhile, there have been some increases. There was an increase on April 1 and October 1 of this year as part of a four-year program to narrow the gap between Canadian Forces personnel and the public service in similar categories and trade groups.

There was, for example, in 1996 the first of the increases, which was a 2.2% adjustment for non-commissioned members. As I said, this was followed by one on April 1 of this year of 1.5% and 0.6% in October. So those increases for the non-commissioned members, the lower ranks, to this point are 4.3%, but there is a further one to come, as I mentioned, as an economic increase.

Overall, I would suggest that with the narrowing of this gap there will be increases that are fairly respectable. Certainly our forces would like more. Everybody would like more. I think this will help to provide for a higher level of remuneration, which is needed.

You commented on bonuses for the upper ranks. They're not bonuses, they're performance pay. It's the only increase that in fact goes to those of the rank of colonel, general, and flag officer. It's generals and admirals, in other words.

That's also tied into the public service. It's tied into the executive level. It goes up for the executive level, and it also goes up for the Canadian Forces and the RCMP.

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So that is what happened in the case of these amounts. They were awarded in 1996, in fact.

They were the first increases, by the way, since 1992, so there has been a long period of freeze for everybody, of all ranks. Those were given out in amounts that I would venture to say are probably going to be percentages lower than what the lower rank and file will end up getting once we've factored in this economic increase, which will go back to April 1 of this year. My effort is to make sure all ranks, particularly people at the lower income scale, get more remuneration to be able to meet their needs.

Now, you talk about food banks. Yes, I've heard those stories as well. I haven't heard any specific story. You say there are more than a handful. You might want to provide some evidence about that.

Mr. Art Hanger: There were 25 at Gagetown.

Mr. Arthur Eggleton: No doubt there are problems like that. Like you, I have received that information, but I have not received specific information about it. Then again, I can understand that. In most cases, I would think, people are not about to divulge that they are using these things.

While that is a totally unacceptable situation, in addition to these pay increases, benefits and programs are available to forces members in need. For example, in addition to the housing allowances in certain locations, and financial counselling, short-term low-interest and even no-interest loans and grants are provided to Canadian Forces members who may qualify. So there are other assistance programs people can take advantage of.

But I think the solution that is needed most is these pay increases. We are well on our way, working on these, and have already provided some wage increases.

Mr. Art Hanger: I trust some consideration will be given to the differences in cost of living among the different areas.

Mr. Arthur Eggleton: Yes.

Mr. Art Hanger: I'm curious, Mr. Minister, about the performance bonus. Obviously it's tied to the performance of the individual, his abilities, his overall performance in doing his job, I suggest. Are these particular bonuses going to people who were named in the Somalia report as deficient in carrying out their duties as members of the armed forces, especially the higher ranks? I might point out Colonel Labbé, for instance.

Mr. Arthur Eggleton: I can't tell you who gets them and who doesn't get them. It's a common practice in both the government and the private sector, right throughout our society, that things like performance pay and evaluations are in fact private between the individual and the individual's employer. I can't tell you who got them and who didn't get them.

I can tell you there is an evaluation process to determine who gets them. While most did get this increase that was announced last year, not everyone got it.

Mr. Art Hanger: Apparently, according to Public Affairs, all of them, such as Colonel Labbé, Armand Roy, and General Boyle, received performance bonuses. Yet when it came down to the review of their performance in the Somalia inquiry, they were left considerably short when it came to fulfilling their responsibilities. So I'm curious. If these gentlemen received it, who didn't?

Mr. Arthur Eggleton: As I said, I can't tell you who got it and who didn't get it. I can tell you that, to be quite honest with you, most people got it, the vast majority of people got it, but not everybody got it. I can't tell you specifically.

And that's a general management practice. It's not something that's an endeavour not to divulge information relevant to the area of concern you have.

But let me tell you about the area of concern you do have. Most of the individuals who are cited in the Somalia inquiry report have left, but for those who do remain there's a matter of their performance and the matter that the comments of the Somalia inquiry are in fact being reviewed.

• 1600

Mr. Art Hanger: So if they received bonuses, then they would be asking them to forfeit—

Mr. Arthur Eggleton: No, it's not a bonus, to start with—

Mr. Art Hanger: Performance—

Mr. Arthur Eggleton: —and there is, as I said, a review. As I've indicated before, the promotion of Colonel Labbé is being held in abeyance. There is, in fact, a review specific to him. The other matters are also being looked into with respect to the other individuals.

[Translation]

The Chairman: Madam Venne.

Mrs. Pierrette Venne (Saint-Bruno—Saint-Hubert, BQ): Good afternoon, Mr. Minister. I would like to continue and conclude on that issue of performance bonuses. I really don't see how you could call them anything else.

You say that the majority of generals and colonels in the forces have received that bonus in 1996 and that it had been a long time since the last one. I would like to know if what the newspapers are saying is true, that they will be getting another one again this year.

[English]

Mr. Arthur Eggleton: No decision has been made relevant to that, but as I've indicated before, it is tied into the public service so that if there is an increase being given to the public service, it would be given also to the executive ranks of the Canadian Forces.

I think in a general way I could say we don't want our executive level people to get behind any farther than the executive level people in the public service, just as we don't want the people at all other ranks to get farther behind. They're already behind; we want them to catch up. So there is no good rationale to deny increases to the senior ranks as well as all other ranks.

Certainly, it's my intent to continue to follow the practice of keeping them in line with the executive ranks. But there is, however, a difference; that is, there is an examination with respect to performance, and I will certainly be looking at that in a vigorous way.

[Translation]

Mrs. Pierrette Venne: If I understand correctly, Mr. Minister, you cannot say yes or no to a performance bonus. You are not the one to decide whether they will get that bonus. Did I understand correctly?

[English]

Mr. Arthur Eggleton: Well, there is a procedure involved in it, and I'll certainly be looking at that procedure.

But generally, the provision made by the government through the Treasury Board would be to provide a similar level of performance pay to the forces, as well as the RCMP, as it does to the public service, and I think that's sound. If you're going to provide for an increase to people at different levels, you should provide it right throughout. You shouldn't say yes to some and no to others in a categorical way. You should provide that, but there is allowance for examining of the individual performance, and that is what I just indicated to you I would want to pursue in a vigorous fashion.

[Translation]

Mrs. Pierrette Venne: My other question is on material management. Since we are here to discuss the estimates I was wondering, given the last Receiver General's report on public accounts if there is some room for improvement in material management at National Defence.

The report shows, under loss of assets due to an offence or other illegal act, that computer hardware and software for a value of $72,370 were stolen it from National Defence, as well as $27,544 in electronic equipment; furthermore a night vision equipment valued at $34,916 and a movable staircase valued at $4,236 were lost due to a criminal act. That's unbelievable.

Under “loss of public assets due to accidental destruction or damages”, we see in the Receiver General's report that National Defence has incurred losses that are difficult to explain, such as $354,000 worth of spare parts, an all-terrain vehicle worth $20,000, and so on. For fiscal 1996-97, losses and thefts amount to a total of $1,483,652.

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In the end, Mr. Minister, it is the Quebec and Canadians taxpayers who pay for your department's lack of control in material management.

Now, are you prepared to make a commitment today that greater attention will be paid—that would be the very least—to the safekeeping of Crown property and to that end, will you commit to set-up an efficient management mechanism in order to avoid this sort of theft in the future?

[English]

Mr. Arthur Eggleton: Of course we always want to be diligent about these matters. I think you need to put in some context and some perspective, though, in terms of the total budget, as to what these losses total up to.

Now, “losses” doesn't mean that it was necessarily stolen, or just lost out of neglect or something else. In fact, there can be deterioration of a piece of equipment, loss through usage in a foreign theatre, for example. There are a number of explanations of a greater detail that would better explain what happened in these individual cases, as opposed to just suggesting that somebody lost it somewhere or that it was stolen.

Certainly our endeavour is to be vigilant about these and to have the best possible systems in place to reduce the chances of these things happening.

I don't know whether my deputy has anything she wants to add to this.

[Translation]

Mrs. Pierrette Venne: I must say that when I spoke of “theft”, I was quoting directly from the public accounts document. It mentions specifically theft of electronic equipment for televisio sets, $27,544. If I use the word “theft” it's because it is here, in the report.

[English]

Mr. Arthur Eggleton: Okay. Well, we look into anything that's a theft.

[Translation]

Mrs. Louise Fréchette (Deputy Minister, Department of National Defence): When there is proof or indication that a theft has occurred, the military police perform an investigation. If military personnel was involved, there will be a military trial. In the case of civilians, they can be referred to the civilian police. I know that there have been a few cases of theft of computer equipment, for example, where the police investigation has led to charges.

Mrs. Pierrette Venne: If the Minister intends to protect the Crown assets and to improve the system it is obviously because he knows it isn't working now, since there are so many thefts.

[English]

Mr. Arthur Eggleton: The short answer is, yes, of course we will continue to do everything we can to protect the assets of the Crown and improve the systems where it is necessary to do so. Again, you have to put these in context in terms of our overall budget. But the short answer is yes.

[Translation]

Mrs. Pierrette Venne: I will ask you again next year whether there has been an improvement.

My other question is on helicopters. Has you know, everyone is awaiting impatiently to find out what your choice will be. Since 50% of the total Canadian aerospace industry is in Quebec, will you make the commitment today that Quebec will receive direct and indirect spin-offs commensurate with its expertise and its place in the industry?

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[English]

Mr. Arthur Eggleton: Our aim in whatever selection we make will be that we maximize the industrial and regional benefits, as is our policy, and to have as many jobs...and economic development with respect to this helicopter purchase in various parts of the country. We're quite mindful of what different parts of the country, such as Quebec, contribute, and contribute well, to the aerospace industry.

[Translation]

Mrs. Pierrette Venne: Still on the issue of helicopters, I would like to know whether the contract will be tied to the replacement of the Labrador and Sea King that are to come later. Will the contract link the two types of helicopters?

What I mean by that is simply that, in my opinion, it would be logical to separate the two contracts, but I'm afraid that you might say you chose one type of helicopters because in the end the ones to follow will be cheaper.

[English]

Mr. Arthur Eggleton: We haven't made that decision. In fact, the helicopter that will be chosen for search and rescue might also be the helicopter for maritime patrol. We have not made that decision. What we've done quite differently from the Conservative government in this regard is that when they went out on this issue, they lumped both of them together. We've separated it. We're doing the 15 search and rescue helicopters now, and then once that is done, we will develop a procurement strategy with respect to the maritime patrol helicopters, which may or may not be the same frame as the search and rescue.

No decision has been made with respect to that matter. We want to get the most cost-effective and best operational helicopter in both cases. So they may turn out to be different helicopters, different frames.

We also have changed the strategy from that previous effort by the Conservative government, which was in fact getting involved in a contract for a developing helicopter. The EH-101 was in the development stage at that time. We are going “off the shelf”, buying a helicopter that is already certified. So for whatever case we end up buying a helicopter, they're all in that particular position.

We will save very substantial money by going off the shelf as opposed to a helicopter in the developing stage, on both of these projects, but it is my hope that once we make the decision on search and rescue we'll be able to very quickly follow with a procurement strategy with respect to the 35 helicopters that are relevant to maritime patrol.

[Translation]

The Chairman: Thank you very much, Madam Venne.

[English]

Mr. Pratt.

Mr. David Pratt (Nepean—Carleton, Lib.): Thank you, Mr. Chairman. I also would like to welcome the minister and his officials.

Minister, I'd like to applaud your efforts as far as the issue of morale is concerned. I think you've hit on a very significant and very important aspect of how our armed forces do their work. Clearly the men and women of the armed forces have to have the morale necessary to do a very difficult job in some of the most difficult areas of the world right now.

As I see it, certainly part of the morale issue is tied to equipment. Our forces have to have the tools necessary to do the job. Obviously, the budget for National Defence has been cut back over the years, and on a capital side, it's continuing to decline.

One of the concerns I have that's related to this is that when you build in the length of time it takes to get projects approved from a procurement standpoint, with a declining budget you may have a continuing morale problem as far as having the tools to do the job is concerned.

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I wonder if you're satisfied with the length of time it takes to get major projects approved. We have a long shopping list from DND that I think is very important, again from the standpoint of morale, and I think some of us would certainly like to see that accelerated. Can you provide any comments on that issue?

Mr. Arthur Eggleton: Yes. I'd like to join you in wishing for acceleration. Some of these projects have been on the drawing board, so to speak, for some period of time. It's time to make decisions about them.

I've mentioned three key ones that we're working on now: the search and rescue helicopters, the maritime helicopters and the submarines. There's also, of course, the purchase of new armoured personnel carriers. These are the major equipment items. There are numerous other smaller, medium-sized equipment items that we have proceeded with, but those are the four big ones. I'm anxious to move on those as quickly as we possibly can. We expect our people to provide quality service and we have to give them quality equipment in order for them to be able to do that.

Mr. David Pratt: As a supplementary to that, Mr. Chair, I think a lot of people recognize that when you're dealing with the new search and rescue helicopter or the maritime helicopter program there are some rigorous requirements from a procurement standpoint that you have to undergo. There are a lot of hoops to jump through in that process.

But do you see any way—I'm thinking of some of the smaller capital items—that some of that stuff could be fast-tracked?

Mr. Arthur Eggleton: We have been fast-tracking some of the smaller items. I'm just looking for some examples here.

Mr. David Pratt: One of the things that strikes me from a morale standpoint is the armoured reconnaissance vehicle, for instance, something that really affects the person in the field in terms of their ability to do their job, or something like the APCs, the armoured personnel carriers, too.

Mr. Arthur Eggleton: We have ordered 240 new armoured personnel carriers and we do have a further option with the General Motors diesel division for another 411. But we also have been moving on some of the other replacement projects, like the clothe-the-soldier project, the Leopard tank thermal site, and numerous other more minor or more medium-cost items.

I agree with you. We want to move as quickly as possible to provide the equipment. I think that is part of the morale deflation. I think a lot of things are part of that. The pay and benefits are part of that, as is the work that you're going to be doing in dealing with the quality of life issues. The social and economic needs are also going to be very important, along with communications.

I think it's vitally important that we understand what our forces personnel are doing and that we appreciate what they're doing, their professionalism, their dedication and the humanitarian work they do. I think if they know that this committee, this Parliament and the people of Canada understand and appreciate the kind of work they do to a greater degree than is the case now, that also is a big factor in terms of morale.

Mr. David Pratt: Thank you.

The Chairman: Does anybody else have a quick question?

Mr. Pat O'Brien (London—Fanshawe, Lib.): Thank you, Mr. Chair.

I have a quick question that follows up on the theme of what the minister's remarks. A constituent wrote to me saying she didn't want to have her taxes directed towards the armed forces, she didn't know what the armed forces did, etc. It took me quite a while to respond to her and try to inform her about why the armed forces exist.

We've seen those in this country who are all too ready to kick the armed forces when they've been having some difficulties, and that's very unfortunate in my view, although we have to acknowledge, as we have, that we've had some problems.

Minister, how do we—other than through the media, which we obviously don't control—tell that good story about the armed forces? Is there a budget for communications, public relations—call it what you will—in the armed forces total package? And what thoughts do you have on how the armed forces themselves, and whoever would like to assist them, can tell the good news about the armed forces? After all, the good news is about 98% of the story in my view.

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Mr. Arthur Eggleton: I think you make a valid point. We do have a budget for trying to get that information across, but of course, like every other budget, it's less than what we would like it to be.

We are finding as many innovative ways as we can. One of them, which I witnessed not long after becoming Minister of National Defence, I thought was a great idea. On July 1 the Blue Jays in Toronto played against the Expos. It was the first time the two Canadian teams in baseball had played each other, and they played to a packed crowd in SkyDome and there was a full television audience. It was Canada Day. What better occasion to showcase the great work of our Canadian Forces personnel? So six or seven people were chosen, real heroes who have done real things above and beyond. They got a terrific reception, a long standing ovation in the SkyDome. I think events like that are helping to get that message across.

You and members of Parliament can also help with the information you put out. We're certainly happy to help provide information for ten-percenters or for your regular reports.

Another thing that's quite valuable, in addition to what our forces personnel are doing, is the recent survey completed by the Canadian Defence Preparedness Association. It indicated the number of jobs in the economy that depend on the defence industry, a lot of them in your constituencies. I think that can be very valuable information for constituents as well.

We'll be quite happy to provide more information. We keep looking for innovative ways.

Through our recruitment program we've also been able to tell a bit of a story about what our people are doing. We've had them at the theatres, for example. Young people go to the theatres and they will see a little promotion bit. It's relevant to recruitment, but it also gives them an idea about the kind of things our Canadian Forces do.

We'll continue to find as innovative a way as we can. We hope the media will publish a few more good news stories about the Canadian Forces. But as you say, we don't control them.

The Chairman: Mr. Proctor.

Mr. Dick Proctor (Palliser, NDP): Welcome, Mr. Minister.

I wanted to pick up on the communication and transparency you spoke about in your opening remarks. Internal public relations are also a way to improve morale, and I think it's obvious you have some way to go, at least with the Union of National Defence Employees. You'll be aware of the letter the president of that union sent to Madame Fréchette on November 3. They are very concerned about the other shoe they believe is about to drop, with their membership being laid off by as many as 5,000. Ms. McDonough was asking you about it today.

I just wondered if you could shed any additional light on that. They received this information from usually reliable upper-echelon Defence employees. This is over and above the alternate service delivery and they are very concerned about it.

Ms. Louise Fréchette: As the minister explained in his presentation, we are committed to finding the most cost-effective way to provide the support services. That led to a decision some years ago to review very systematically all support activities to see whether there are more cost-effective ways of doing them, whether it is by re-engineering and reducing our own costs internally or by working in partnership with industry. We have tried to keep contact with the trade unions, and we've tried to keep abreast of the evolving thinking and examination we are doing.

The numbers that have been mentioned as decisions to cut do not have a foundation in reality. What is true is that, first of all, we still have to absorb in our budget another $600 million cut next year, and secondly, we are engaged in this process of systematic review of all our support activities, which involve both civilian and military. We are committed to maintaining an open dialogue, to associating with the unions in our thinking, so we proceed with fairness to our employees and in full consultation with their representatives.

• 1625

Mr. Dick Proctor: On the cost-effectiveness argument, there's a lot of skepticism that alternate service delivery is really cost-effective at all. Again, the concern is that in places that have been privatized—for example, CFB Meaford—regular audits are not being done and we just don't know what the cost of running those privatized operations are. Along with it, of course, because it's privatized, it probably means a diminution of salaries and benefits for many employees that had worked for the Department of National Defence and enjoyed higher levels.

So on the one hand we're talking about quality of life and wanting to improve that, and on the other hand we're busy contracting out work at a great rate and seeing corresponding reductions in people's take-home pay and their benefits. It's not clear to me at all how this is good for morale in the armed forces and the future of the country.

Ms. Louise Fréchette: First of all, a review under alternative service delivery does not equate necessarily to contracting out. Contracting out is just one of the options that is being looked at when an activity is being examined for alternative service delivery. It can also be a transformation of the way we do business internally.

Secondly, we try to get the best value for money by making sure that we subject these activities to competition. Where it is possible we've actually allowed in-house teams to compete on a level playing field with the private sector, and we do not have an automatic bias in favour of contracting out.

I think, yes, you're right, the value of the service we get from contracted-out activities has to be kept under constant monitoring to make sure that the benefits you get the first time up remain there over the long haul. We are just starting in this process; this is just a few years old. We are learning as we proceed. As I said earlier, we are committing to maintaining an open dialogue in consultation with our union partners on that.

Mr. Arthur Eggleton: Might I add that there has to be a fitness case each time we go into this. It's a rigorous examination as to what makes sense under ASD and what doesn't make sense. As the deputy minister says, we're quite open to variance in this system. It doesn't have to be people outside; it could be the people inside. In fact, some of the contracts won have been by the people on the inside, people who then transfer into another corporate entity and carry out the program in a very cost-efficient fashion.

I saw that when I was in Trenton the other day. They do their food services. A lot of them are people who used to be employed by us.

So there is a very close examination made in all of those cases. Where somebody wouldn't be transferring to a new entity, then we are very careful about how we treat these people. We've been doing that throughout the process of downsizing in the public service, with the early departure incentive and the early retirement incentive, and we use those same mechanisms in the case of defence department employees, civilian employees.

For example, in the case of the NATO flying training project, which I know you're familiar with, we've said that 70% of the people who are employed in that project should be from the current employees who operate in the Moose Jaw facilities. It might be better than that. In fact, I think there's a good chance it would be better than that, because our requirements for foreign participation in the NATO flying training are small, I would say, by comparison to the potential we have in that.

I met with the union leader in Moose Jaw when I was there last Thursday and made it clear that it was our effort to treat people fairly and humanely, and hopefully most of them are going to get a job with the new entity.

Overall, to meet the kinds of cuts we've been required to meet—and it's part of the deficit reduction program—we've had to become more innovative and creative in how we go about operating many of these things in a more business-like fashion. Still, though, to meet our operational requirements—that's always vital.

Mr. Dick Proctor: I have one additional question on helicopters.

• 1630

I was interested in your comment about the helicopters in the Maritime Command and the hope that you'll do that as quickly as possible or that will happen as quickly as possible, Minister. However, I noted in one of the Halifax papers this week that the military there, the naval forces there, are assuming that they are stuck with the Sea Kings until 2005 and some refurbishing is going on. It suggests on the one hand that likely it's not going to happen as early as you're suggesting here this afternoon.

Mr. Arthur Eggleton: As you can imagine, we always have to look at options. Until a decision is made to purchase, we have to deal in an operational sense with what we have. We have to make sure that equipment is in operable condition, that it is capable of doing the job in a safe fashion for our personnel who are flying in those machines.

They're old, and they require even more maintenance as time goes on. But we will not put them in the air unless they are safe to function in the air.

The forces have to look at what the different options are. Until they hear that a helicopter purchase is coming and they know exactly on what date it's coming, they have to have plans or they have to have options in terms of the present equipment.

They also know that even if we make a decision as quickly as possible, it will be two or three years until we actually have delivery or have that helicopter in an operational condition. So they have to make do with what's there and make sure that we continue to fly them safely.

So there are optional plans that are developing.

It's not assuming that there isn't going to be one. It's saying, look, if we don't get this, then here are some of the other options we have to work with. That's a responsible way for anybody to manage—to look at what their options are.

I have every intention for us to proceed as quickly as possible on replacing the Sea Kings.

The Chairman: Thank you very much, Mr. Proctor. Mr. Price is next.

Mr. David Price (Compton—Stanstead, PC): Thank you for being here this afternoon, Mr. Minister. The last time I didn't get a chance to get to a question. Now I have opportunity. I'm going to try to make the most of my time.

You said in your remarks, and in your answers also, that we need the best quality equipment for our people on the ground and in the air. That, of course, I am in complete agreement with.

You also mentioned the 1994 Defence white paper. I happen to have a copy here, and there are a couple of lines that I want to read to you:

Canada's maritime forces will be adequately equipped to carry out their new array of tasks. This is an urgent need for robust and capable new shipborne helicopters. The Sea Kings are rapidly approaching the end of their operational life. Work will, therefore, begin immediately to identify options and plans to put into service new affordable replacement helicopters by the end of the decade.

That was in 1994.

I also have information here, from the Department of National Defence briefing on April 2, 1993, that projected costs of keeping the Sea Kings flying until 2003 would be $960 million. That in fact is 12 hours of maintenance for every hour in the air.

I also have a letter here, signed by you on October 30, addressed to Senator Forrestall. In this letter you say:

As for the maritime helicopter project, the project management office consisting of 21 military and 6 civilian personnel has been set up at the Rockcliffe site in the National Defence Headquarters in Ottawa. This office's mandate is to document the requirements and evaluate the possible options for the replacement helicopters. The project cannot be developed any further until the government invites the Department of National Defence to bring the project forward for preliminary project approval.

As the member next to me mentioned, there were reports this weekend that you were looking at the possibility of refitting our 30-year-old Sea Kings, going up until the year 2005. In light of this, is the government looking at respecting the 1994 Defence white paper? You're getting further and further away all the time.

Mr. Arthur Eggleton: We do respect the 1994 white paper. I hope we can also meet the time deadlines.

Mr. David Price: You aren't anywhere near those.

• 1635

Mr. Arthur Eggleton: This one, I grant you, is a very tight one to meet in terms of the Sea Kings, by the end of this decade, but all of the other information you've provided is quite correct in that when the search and rescue helicopter decision is made there'll need to be a decision made by the government to proceed on procurement for the replacement of the Sea King.

As I've indicated here, it's my intention to seek that at the earliest opportunity. We do have a team of people working on that.

As well, as I indicated previously to Mr. Proctor, the need to look at options, just to be sure, until a decision is made, is just standard practice. It's no less of a commitment or a resolve on my part to proceed.

Mr. David Price: By the looks of it, though, the team is set up but they're not doing anything at the moment.

Mr. Arthur Eggleton: What are they doing right now? What are they doing right now?

Voices: Oh, oh!

Mr. Arthur Eggleton: A lot of preliminary work needs to be done in order to convince the government, of course, that we should proceed on this now. We have to be ready to answer a lot of questions and have our information all lined up and ready to go.

All that preliminary work is being done so that the minute we get a go, a green light, we're off and running, not wasting any time.

Mr. David Price: What about the refitting, then, on the Sea Kings right now? Is there any work really being done to put that into operation?

Mr. Arthur Eggleton: Until we make a decision on proceeding with the replacement of the Sea King in such a way that we can see the timeframe of it, then the options are left open. But once that's determined, then we can proceed to do whatever maintenance is required up to the point where we would have a new helicopter in place and ready to go. Meanwhile, they have all the options ready for any eventuality.

Mr. David Price: But at a refitting cost of $960 million, if we go to that point, isn't it going to be a lot cheaper to just get on line and get the new helicopters ordered?

Mr. Arthur Eggleton: Oh, I think so. The older equipment becomes, the more costly it is to repair it and retrofit it. But we're not going to put anything in the air that isn't going to be in a safe condition to fly.

The options have to be looked at, but I think the wisest course would be to proceed as quickly as we possibly can. The government has to look at all of its priorities. We have a lot of demands and needs that the Canadian public wants us to look at. This is one of them. But it's certainly my effort to proceed as quickly as we possibly can.

Mr. David Price: It seems to be dragging on so much.

Mr. Arthur Eggleton: As I said, the search and rescue helicopters are being done first, and then we'll be getting on with the replacement of the Sea King. I'm anxious to move as quickly as we can on all of these areas. I meant it when I said that we expect quality services, we have quality people, and we should give them quality equipment.

Mr. David Price: I'll go in another direction.

I was looking at the Leopard tanks. You're planning on replacing the turrets. When you have the new turrets on, what's the life left in those tanks? They're pretty old now.

General Maurice Baril (Chief of Defence Staff, Department of National Defence): The Leopard with the new turret—we're replacing the turret, not for the turret itself but for the sighting system, the fire control system—will give us state of the art, we believe, until 2010. So we have a tank that will be good for another 13 years, allowing us to move into the direction of the ACV, or armoured combat vehicle, and to see what would be needed beyond 2010 on the battlefield from a tank point of view.

Mr. David Price: Have you not already started preliminary work, even with some test vehicles, on this new armoured vehicle?

Gen Maurice Baril: No, not the project of armoured combat vehicle. It's at a very early stage. They're not linked.

Mr. David Price: Thank you.

The Chairman: Thank you very much, Mr. Price. Mr. Benoit.

Mr. Leon E. Benoit (Lakeland, Ref.): Thank you, Mr. Chair, and good afternoon to all of you.

Mr. Minister, before I get to my line of questioning, I have to try to clear up what both Mr. Hanger—

The Chairman: It's just a point, but we're down to the five-minute question.

• 1640

Mr. Leon Benoit: Right. What Mr. Hanger and Madame Venne questioned you on was the issue of those performance bonuses, which you said aren't performance bonuses. Now, just to make it really clear, could you explain what those are if they're not performance bonuses?

Mr. Arthur Eggleton: They're pay increases.

Mr. Leon Benoit: So they're straight pay increases.

Mr. Arthur Eggleton: This is the only pay increase mechanism we have, but it's not one that's automatic for everybody. A lot of pay increases are at the lower levels. Those are automatic, but these are not automatic, they're tied to performance.

Mr. Leon Benoit: But almost everyone gets it.

Mr. Arthur Eggleton: There is a review process. That certainly seems to have been the practice. That was the practice in the last one that was given, which was last year.

Mr. Leon Benoit: It was $4,000 to $9,000.

Mr. Arthur Eggleton: Although it wasn't given to everybody, it was given to most everybody.

Mr. Leon Benoit: That's $4,000 to $9,000.

Mr. Arthur Eggleton: No, I don't know if—

Mr. Leon Benoit: So certainly that doesn't compare that favourably to what, say, the lower ranks got, which was a 0.6% increase. It would be under $200 a year that many of those men and women would get in terms of an increase, compared to $4,000 to $9,000 for the top brass.

I just want to ask you, Mr. Minister, whether you think that will boost morale. Is that good for morale in the forces?

Mr. Arthur Eggleton: Not the way you put it, but you don't put it correctly.

Mr. Leon Benoit: Well, I think I did. Could you please straighten me out, then?

Mr. Arthur Eggleton: You're comparing the performance pay that went to the senior people as a dollar figure as opposed to a percentage figure. Of course, they are at higher salary levels to start with. You have to take that into consideration. Also it was the first of any kind of increase in four years.

But you only talked about one of three, and the lowest of the three, pay increases that were given to the non-commissioned members, which was the 0.6%. You ignored the 2.2% and 1.5%. You blend them to give 4.3%. There's also the fact that another increase is coming already.

When you put all of those together, I venture to say that the percentage increase will be higher than that for the senior ranks. I'm not asking you to get sympathetic for the senior ranks. I'm saying we shouldn't get further behind at any rank level. Let's make sure that we get more remuneration for the lower ranks, who need it.

Mr. Leon Benoit: So the less than $200 for the lower end, in terms of increases...you were saying that there are more increases, but that's over an extended timeframe. That's over two or three years, isn't it, whereas this is a pay increase for one year?

Mr. Arthur Eggleton: No, it's every year. There are three increases in this year alone. One happened last year. So that's four increases compared to the one you're talking about.

This is only part of a four-year effort. This is one year of a four-year effort to close the gap of public service salaries.

I can tell you that I'm not spending a lot of time concerning myself with the colonels and generals in terms of their pay increases. I'm concerning myself with the other ranks in terms of the pay increase. I'm working to get them these increases. At the same time, I don't think the colonels and generals should be getting further behind the comparable increases that are being given in the public service.

Mr. Leon Benoit: This issue is morale.

Mr. Arthur Eggleton: Oh sure, but there's morale at all levels. Why would you be suggesting that executives in the public service should get these increases and not the executives at the equivalent levels in the Canadian Forces and the RCMP? I don't think they should be denied them, but I don't think they should get them automatically either. As the system suggests, it's tied to performance.

As I indicated a while ago—we're getting repetitive here—I would be more vigorous with respect to that matter. My focus is really to make sure that the lower ranks get the needed pay increases. We will make three changes to their pay in total in this one calendar year.

Mr. Leon Benoit: Part of the problem, of course, is that this pay increase of $4,000 to $9,000 has gone to people like Colonel Labbé and so on. These are people who haven't done the job.

Mr. Minister, we're not getting through many questions here. Let's get on to the total number, according to the estimates, of the regular forces who will be reduced. It will go to about 60,000 by 1999.

Is that the actual number? I heard that in fact the actual number of people who are there in the regular forces now is about 54,000 to 55,000 people. Is this 60,000 the actual number that will be there? What is the number of people in the regular forces actually there now?

• 1645

Mr. Arthur Eggleton: The figure I gave you earlier in my remarks was 61,000.

Mr. Leon Benoit: I've heard this 54,000 come up before. The question is comparing that, the large reductions in the number of regular forces, to the number of brass. The total reductions proposed in the number of brass is two—none at the very upper levels. For example, for colonels and lieutenant generals there is no reduction for 1997-98; for major generals, no reduction in numbers; and for brigadier generals, a reduction of one, from 49 to 48. The total, then, is a reduction of actually one, from 79 to 78, over that year period.

Is this good for morale, Mr. Minister, a reduction of one in the top brass compared to the reductions that we're seeing in the regular forces?

Mr. Arthur Eggleton: I don't think you can just look at this on a one-year basis. You have to look at it over the last few years, where there have been in fact substantial reductions in the generals and admirals, the flag officers. The reductions, as I recall, have been in the area of about 40%. There has been very substantial reduction in the people in those ranks.

Mr. Leon Benoit: Will the reductions in the top brass continue beyond 1999?

The Chairman: Mr. Clouthier.

Mr. Hec Clouthier (Renfrew—Nipissing—Pembroke, Lib.): Thank you very much. Thank you, Mr. Chairman.

Mr. Minister, I'm very pleased you're here today. I was very interested and heartened when you said that the proposals are not going to collect dust, that you're going to be proactive. I know you have a gentlemen sitting next to you who has already indicated that he's an impatient man and he's going to get the job done. I know that many of these recommendations are going to be implemented.

To briefly revisit this $4,000, I was at nine legions throughout my riding, and many of the people were very interested in this, especially the lower ranks. My friend opposite on occasion—I know he's wearing his cowboy boots today—sometimes gets riding his horse in one direction and it's hard to turn that damn horse. But I did speak to those lower-level ranks.

Mr. Leon Benoit: If he's going the right way, why bother?

Mr. Hec Clouthier: It's going the wrong way, because when I looked into it and talked to the lower-end soldiers, the corporals, and explained to them that the 0.6% was the first increment and three more were coming behind it... As far as the $4,000 tied to performance is concerned, listen, my friends, there are many people out there, especially the general public, who think if our pay was tied to our performance we'd lose a lot of money. Beauty is in the eye of the beholder.

So having said that, I believe everything is relevant. I do agree with the minister on that. You have to make sure the pay is there and the lower-grade soldiers, who are the front-line soldiers, are getting the increases. Once I indicated that to them, they seemed to be quite happy.

As far as the theft goes, it's a fact of life. You can't stop people from stealing on occasion. Someone stole the damn budget a couple of years ago in the government. That is a fact of life and it's going to happen whether it's in a military base or whether it's in this room or wherever. I do know that on CFB Petawawa there was some theft, and that they were apprehended and charged. It's interesting to note that the four people involved were all civilians. I had to take the heat over that.

About the ADS, the caveat I would throw out to the minister is be very careful about this alternate delivery service. Conceptually I agree with it if they can do it and be more fiscally responsible, but I would be very interested to know the outcome at some of these military bases that have gone to ADS.

I do have a question, my friends, and the question has not been brought up. I did notice, Mr. Minister, you said you're going to appoint an ombudsman. I would like you to elaborate on this ombudsman. No one has asked about it.

Mr. Arthur Eggleton: First of all, with respect to the pay matter, let me put it in another context. If you look at the pay for Canadian Forces personnel since 1991 to the present, you'd find a lot of the word “frozen”, because for all ranks there has been a fair bit of freezing. But if you look at what has happened in terms of increases, you'd find that to this point in time the increases for the non-commissioned members—and this is important to the matter of the $4,000—has been 7.3%. For the general service officers, the rank above them, sort of the middle rank, it is 6.5%. For the senior officers, the ones who get the performance pay, it's 3%. That counts the figures from last year, which you've been talking about.

• 1650

I might add that not everybody got 3%. It varies depending upon the performance. Some of them got less, some of them got more, but it averages out at 3%, whereas for the non-commissioned members in that same period of time it was 7.3% and for the general service officers 6.5%.

So I hope that puts it in a little bit more perspective.

On alternate service delivery, yes, I agree with you. We should have alternate service delivery, but not necessarily alternate service delivery. If it doesn't make sense, if we can't make a business case, we shouldn't be doing it. We should only be doing it where it does bring about greater efficiencies and cost-effectiveness of the service. We watch that carefully and I watch it carefully. Right from the beginning, I've made it known to the department and the Canadian Forces that's how I feel about it, although I think we've done some very good ones and I hope we'll continue to be able to do them. But each case individually has to be examined on its merit.

About the ombudsman, we haven't finalized all of the criteria by which the ombudsman will operate. It will be similar to what ombudsmen in other services are doing. It certainly will be independent. In addition to looking into individual cases and bringing them to the attention of the CDS or myself or whoever, that person will also report annually, make a report that will be made public and made available to this committee and to the Parliament for further examination.

It will be a very open process in terms of the annual report and that person, he or she, will have access to this committee and to making information public. So I think it will be very valuable in trying to deal with difficulties that arise, with people perceiving that they have not been fairly dealt with, as is the role of an ombudsman in general.

But there are going to be other procedures as well. I mentioned grievance procedures, a grievance board. There are alternate dispute resolution systems that will be put into effect that will speed up the process for dealing with these disputes, and all in all I think it will make for a speedier, more efficient process. I think that again will also help morale because it will be perceived to be a fair process.

I'm hopeful that we'll be able to appoint such a person soon. We're looking now into the possibilities of who, as well as firming up exactly what the terms of reference for that person will be.

The Chairman: Thank you very much, Mr. Clouthier.

For a point of clarification for my own information, was any of the material in the Auditor General's report that was stolen found? Does anybody know? Was any of it recovered?

Gen Maurice Baril: I don't know. In the magnitude of the operation we're running through a year, it's not very much that disappeared if we're talking of 75. I would have to go through the police investigation or summary investigation that we have to see if we found the equipment and if we found those who had stolen it or were responsible for having lost it.

The Chairman: I think it would be important. If he says it's stolen, it should also be reported whether the material was recovered.

Gen Maurice Baril: If it's written in the report of the Auditor General, it means that we have made an investigation and we stated that it had been stolen, so we will have to go through the investigation to find out exactly what happened.

The Chairman: I see.

Madame Venne.

[Translation]

Mrs. Pierrette Venne: I would simply like to give the information you're asking for. I'm sorry.

[English]

Mr. Art Hanger:

[Editor's Note: Inaudible]

Ms. Pierrette Venne: Yes, I know, but I'm just answering his question.

• 1655

Mr. Art Hanger: Okay.

[Translation]

Mrs. Pierrette Venne: You have here the amount of the loss, the amount recovered, the amount that is not expected to be recovered and the amount that is expected to be recovered in following fiscal years.

[English]

The Chairman: Mr. Hanger.

Mr. Art Hanger: Since 1993-94, $2 billion has been cut from the budget. Is that correct?

Mr. Arthur Eggleton: It's a 23% cut in the budget. There were cuts even before that, by the previous government.

Mr. Art Hanger: Right. With that, of course, as outlined here in the estimates, critical deficiencies continue in various areas. They call them, as stated here, “critical deficiencies”, in the area of submarines and maritime helicopter fleets. My understanding is that the submarine procurement money has already been set aside, and has been set aside for some time.

Again, I really fail to understand or see where the barriers are in the purchasing of the helicopters, shipboard as well as search and rescue. I don't think there's an opposition member here who objects to the purchase of those particular items. There isn't an opposition member here who opposes the purchase of the submarines, which we all agree are required. Even then, it doesn't secure the marine net.

I guess it all falls on your shoulders, sir. Why the delay?

Mr. Arthur Eggleton: I don't think there are barriers. I'm glad to hear, by the way, what you're saying about support for the procurement projects.

I don't see them as being barriers. I see them as being prudent, as we look at what our requirements are, the best value for the taxpayer. These are big expenditures for the Canadian taxpayer. We have to look at them very seriously to make sure they are the best value for the taxpayer's dollar and at the same time meet our operational requirements.

A fair bit of work has gone into these procurement issues. I think that's good. At the same time I want to move it along as quickly as we can and finalize these decisions. I believe we will have a decision very soon on the search and rescue helicopters.

Mr. Art Hanger: Money has been set aside for the submarines. We're actually being given those things at a very reasonable cost by England. That is considered a critical deficiency, along with the helicopters.

I can see only one hold-up on the helicopters, and that is the fact that the contract four years ago was cancelled by your government, the Liberal government—the EH-101 cancellation. There's a hesitancy now to jump in, to purchase what is desperately needed in the military end of it, because it may put your government on shaky ground and might blow up in your face. If that's the case, I think you're procrastinating for undue reason. You've had four years to decide what is good for the military and what isn't. Is that the reason, the cancellation of that contract?

Mr. Arthur Eggleton: No. We're not procrastinating. We disagreed with a previous government's movement in this regard in terms of the EH-101. We cancelled that. We did not feel that was in the interest of the taxpayers, nor was it necessary to meet our operational requirements. It was a Cadillac version, as has often been said.

We think something more modest is appropriate. Also, we believe off-the-shelf is appropriate. But we still have to meet our operational requirements, and we reviewed all those requirements in establishing the criteria for the bid on the search and rescue helicopters, just as we are doing in other cases. We want the best equipment within an affordable range.

• 1700

We have less money to deal with. We have to make sure that we sharpen the pencil and that we meet what requirements we have to meet but remove those things that are not required. That's exactly what we've done in this case. We've gone through this procedure and gone out for bids. It's not something that happens overnight. These are big dollar amounts, and they have to be done in a proper fashion. We don't get a chance to second-guess. We don't have the opportunity, the luxury, of making the wrong decision.

We have to do everything we possibly can because of the amount of money involved and the fact that we're involved with saving lives, in the case of search and rescue, on a regular basis. We have to make sure that we have the proper equipment. So we've gone over this with a fine-toothed comb and established criteria to examine these bids in a way that will meet our operational requirements and give good value for the taxpayers' dollars.

I don't think we should underestimate the time it takes to do those kinds of things, but we're anxious to get on with it. We have to balance all of these components of the equation and get on with it as quickly as we can to make the purchase.

[Translation]

The Chairman: Madam Venne.

Mrs. Pierrette Venne: With regards to spending for the Primary Reserve, it seems to include headquarters' staff. I would like to know why there was such a major increase this year compared to fiscal 1996-97, with a budget going from $19 to $31 million, when there have been cutbacks in NDHQ.

LGen David Kinsman (Assistant deputy minister, Personnel, Department of National Defence): When you mention the Reserve, are you taking about the forces?

Mrs. Pierrette Venne: I'm taking about the Reserve Headquarters. It says here that expenditures for the Primary Reserve include headquarters' staff. It is in the estimates, where you find comparative figures for the naval reserve militia, the air reserve and headquarters. The headquarters' budget for 1996-97 was $19 million and it is $31 million for 1997-98. What happened in that period?

[English]

LGen David Kinsman: I don't have an answer for that.

Mr. Arthur Eggleton: What page?

[Translation]

Mrs. Pierrette Venne: No. I don't have the page for your budget. Mr. Chairman, if we cannot get the answer now, maybe we could get it later, through the clerk. Is that OK?

[English]

Mr. Arthur Eggleton: We're talking about the naval reserve headquarters in Quebec City. Is that the one you're referring to?

[Translation]

Mrs. Pierrette Venne: Not only in

[English]

Quebec City; not only there but everywhere.

Mr. Arthur Eggleton: Okay. We'll get that information.

[Translation]

Mrs. Pierrette Venne: If you don't mind, you could send the answer to the clerk. Thank you. That was my only question.

The Chairman: Thank you.

Mr. Clouthier.

[English]

Mr. Hec Clouthier: Thank you very much, Mr. Chairman.

Mr. Minister, as you well know and have already indicated today and on numerous other occasions, one of the great difficulties in procurements or getting new equipment is that there seems to be, on occasion, a lack of dollars. We have to be fiscally responsible, and that's one of the reasons we look at this alternate service delivery.

It's nice to have a 1994 white paper and say that we're going to buy all new equipment. I come from the field of business. Most certainly, in my own mind, I'm going to buy five new trucks and three new bulldozers, and all of a sudden things happen and the money just isn't available.

Having said that, perhaps there is a way we can generate some revenue through the military. I believe I've discussed some of this matter with you before.

Many of our bases have large land masses. Some of them have opportunities for ecotourism, whether it's partnerships with the private sector or with other government ministries. Would you be agreeable to looking at something like that to increase some money being brought into the pot?

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Also, if we do make some money on that—because I know on occasion it has—let it not go into the general revenue fund. Let's put it into the military fund. I know Finance Minister Martin might not look upon that very favourably, but since we are bringing in the money, whether it's selling old equipment or it's selling timber or it's getting into ecotourism throughout Canada...

I guess the question would be twofold, then. Would you look favourably upon that? Secondly, could we somehow manage to put this in a contingency fund for ourselves?

Mr. Arthur Eggleton: I'm all for that. I'm all for us being innovative and being able to earn revenue and keep our revenue, keep Paul Martin's hands off the revenue.

We are looking at a number of things. There are some things where perhaps we've gained revenue and shared it with the centre, as it's called.

You talked about the capital purchases. The NATO flying training program is fresh in my mind. Here is a case where there is a very substantial amount of investment in equipment, but it's going to be made by the private sector. Sure, they'll be recovering from us and from the other countries that are going to participate in this, but we get the private sector doing some of those things that would be difficult for us to do.

You talked about the land mass that we have. We're talking with one country in terms of their airports. There's a possibility of sharing some space at Cold Lake. We've got lots of space there and we'll be able to gain some revenue. They want some exposure to the opportunities for flying in that area.

So we have a number of opportunities, and we have forces on the ground in Alberta from the British... We have forces in other operations. And, yes, as much of that as we can do to gain revenue we will certainly want to do, and we certainly hope to keep the revenue to use as part of our ongoing requirements.

Mr. Hec Clouthier: I have a supplementary question in reference to my home base at CFB Petawawa.

As you probably know, I've also been speaking with NRCan with regard to the old-growth forest that we have there and the possibility of hooking up in a partnership with the Canadian Ecology Centre. Hopefully something like that can come to fruition.

Those are the types of issues I'm talking about, Mr. Minister, where it would be a win-win situation not only for the Government of Canada, not only for the military, but also for the people of Canada, because it would showcase what we have.

Mr. Arthur Eggleton: I'm happy to look at those possibilities.

Mr. Dick Proctor: I want to go back to the cutback question, Mr. Minister.

I've been told, since this meeting began in fact, that this afternoon personnel officers at DND are being advised that up to 6,000 jobs are going to be cut over the next short while and to prepare to do a lot of work. I want to zero in on this. I'd like to get to the bottom of it. Is it true or is it not true? Where are we?

Mr. Arthur Eggleton: I don't know about the figure you're using. I'll ask the deputy minister to comment further.

But as I indicated in the House today in response to a question from your leader, two kinds of cuts are going on right now. We're talking about the civilian side here.

Mr. Dick Proctor: Right.

Mr. Arthur Eggleton: One is relevant to implementing decisions that were made in the 1994-95 budget with respect to cutbacks that bring our budget down to where it is this year and where it will be next year. In fact, next year will be the last of those cuts to be made. Most of those should be known and most of those should be of no great surprise.

For those areas where they are occurring, if people do not get alternate employment with an agency that may be picking up some of the work, or however it's being done, then of course there are the early retirement programs.

The other kinds of cuts that could be made could come through the alternate service delivery program. Here again, as in the case I used, the example of Moose Jaw, provisions are made wherever possible for people to transfer into the new entity that will be doing the work, and in many cases its employees who win an internal bid to do the work under an ASD proposition.

So those are the extent of the cuts to this point in time. No decisions have been made about any other cuts whatsoever.

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Mr. Dick Proctor: So your first example is not alternate service delivery—the 1994 white paper. Is the second example you're using ASD? You talked about implementing decisions from the white paper.

Mr. Arthur Eggleton: I'm sorry, I meant decisions that were made in the budget in 1994-95 with respect to overall government spending reductions. The implementation of that was done through the program review process. Cuts were attributed to all departments, programs and agencies, including National Defence. We're implementing those over a three-year period.

Next year will be the final fiscal year for the implementation of those cuts, which will bring us down to a budget of about $9.2 billion. That represents about a 23% cut since this exercise started in 1994.

So that's the one set of cuts that have been made. It's now in the final stages.

The other changes would come about as the result of alternate service delivery. They would not be big numbers like 6,000, but they could affect some employees. Some of them, of course, could get jobs with the new entity that operates some of these programs, or as I said, there could be internal bidding that would result in employees taking it over.

Mr. Dick Proctor: If the number won't be 6,000, what might it be?

Mr. Arthur Eggleton: It depends on what we're talking about here. Are we talking about cuts across Canada? What period of time are we talking about for the cuts? I don't know. Maybe the deputy minister has a better handle on what that number might be.

Ms. Louise Fréchette: We can't put a number on it to the extent that you can't prejudge what an analysis of the best way of doing an activity will be. There are no instructions to prepare us for a 6,000-person cut in DND at the moment.

I said earlier we started a couple of years ago and we're going to look systematically for some time at various sectors of activity. We will look at how to do it, what our costs are, how they compare to the private sector, and whether we should compete with it. If we compete with it, should there be an in-house bid, an in-house team? It may stay in the private sector. Any numbers attached to this systematic review anticipate a process that goes through several stages before it yields any number at all.

The Chairman: Thank you very much, Mr. Proctor.

Mr. Price.

Mr. David Price: Being a fan of the Somali report, especially the part about the need for a vigilant Parliament, I was happy to hear you say the ombudsman would be reporting to this committee.

Mr. Arthur Eggleton: The ombudsman will make a report to me, as I recall from the process, but that report will be made public and be put on the desk of this committee.

Mr. David Price: Okay.

I have to go back to helicopters, because you opened the door again. Your experts at the Department of National Defence are still recommending the EH-101. Will you be going with what they're recommending?

Mr. Arthur Eggleton: I didn't say they were recommending the EH-101.

Mr. David Price: They have been all along.

Mr. Arthur Eggleton: The decision has not been made on which one of the four helicopters will be chosen.

Mr. Hec Clouthier: I thought it was Boeing.

Mr. David Price: I'll go away from the helicopters again and back to submarines. Could you tell us what stage the negotiations are at right now for the submarines? We haven't seen anything, so we must be at some level.

Mr. Arthur Eggleton: There are discussions going on now between us and the British. Again, I would say a decision on that will be very soon. It's been some period of time, as you know, and the British are anxious to get on with doing something with those submarines.

Mr. David Price: That's what we hear. We don't want to give them to anybody else. They want to give them to us.

Mr. Arthur Eggleton: I don't want to comment on the word “give”.

Some hon. members: Oh, oh!

Mr. Arthur Eggleton: I'd say we're closer than we've ever been. We're talking with them very seriously.

Mr. David Price: I have one quick question. Personnel cuts at National Defence headquarters are going on and at the same time the costs are going up. They've gone from $19 million to $31 million.

• 1715

Mr. Arthur Eggleton: How does that work with all these cuts?

Mr. David Price: It doesn't balance out.

Mr. Arthur Eggleton: We're cutting the staff substantially.

Mr. David Price: And the money is going out.

Mr. Arthur Eggleton: It must be a timing—

Ms. Louise Fréchette: I don't think we're talking about the same thing here.

Mr. David Price: That's National Defence headquarters.

Mr. Arthur Eggleton: Overall the costs are going down, because we have cut the number of staff pretty well in half.

LGen David Kinsman: Some of it may be attributable to the fact that you have now consolidated three environmental headquarters into NDHQ.

Mr. Arthur Eggleton: That's a point, yes. The three services are now headquartered out of NDHQ, whereas previously they weren't. While the overall overhead costs of running headquarters operations are reduced substantially, and are reducing substantially, some consolidation is also going on. That would probably be the reason.

The Chairman: Mr. Benoit.

Mr. Leon Benoit: I will pursue the line of questioning I started before.

The numbers in the regular forces will be reduced just between this year and next by about 2,000, the top levels of brass by 1,000. The range that's given for numbers expected to be in the reserves is between 26,000 and 32,000, which is a very wide range. It seems like a very unsure estimate. Are the reserves viewed as the buffer that will be used to reduce spending if the costs of equipment procurement or if the pay increases are higher than anticipated at the time the estimates were put together? Do you see the reserves as a buffer?

Mr. Arthur Eggleton: No, I don't consider them to be a buffer. Any time you have to look at your financial requirements and the resources you have available you have to balance things off. If you're making cuts or making additions, you have to look where you do them. You have to balance your needs. You have to look at your priorities. I wouldn't call them a buffer, though.

We are in the process of increasing the reserves. We are into a recruitment program, trying to get more people to join the reserves.

Gen Maurice Baril: On your comment about the number between 26,000 and 32,000, this is not according to the funding they have, it's according to the number of training days they have. We have the establishment numbers. We have the paid ceiling. It's a rather complex way of doing it—the amount of money we have available.

We will have more people on the armoury floors...and I'm talking about the militia; this is the one I know the most. When we are authorized to have 18,500, the army can probably muster on the armoury floor on a regular basis over 22,000 to 23,000. Historically that's how it has been going all the time. There is money available for 18,500, but with that amount of money they can actually hire much more on a yearly basis.

Mr. Leon Benoit: So why the wide range in the numbers?

Gen Maurice Baril: The wide range is because we will say we have such a level of a paid ceiling, but with that amount actually put into the reserve pay we can have more people on the armoury floor than we have stated at the beginning.

Mr. Leon Benoit: Could I get you, Mr. Minister, to table a document saying the actual number of regular forces currently there in our forces, the actual numbers of brass at different levels? May we have that? I want to make sure those figures are accurate, though. Also, I would like to know the number of reserves who are there now, the actual people who are there. I think it's important for us to get that.

Mr. Arthur Eggleton: I would be happy to do that. We could even do some comparative work in terms of where we were in 1994, before these cuts and some of these policies were implemented. We can show you the trend there. We'll provide that information.

Mr. Leon Benoit: About the cost for peacekeeping, an extra $32 million bill has been thrown at the department in that area of peacekeeping with the fighter jets, Operation Mirador. It's an extra $32 million that wasn't budgeted, I understand. I'm just wondering where that money is coming from, whether that could affect the number of people who will actually be in the reserves.

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Mr. Arthur Eggleton: First of all, much of that cost is the cost of having the fighters and the fighter pilots. Much of it is an ongoing cost. In other words, we'd have it whether they were there, in Bosnia, or whether they were here. I don't know if we can tell you what the incremental costs are out of that.

Gen Maurice Baril: If I may, I'm not exactly sure what are the incremental costs for the squadron minus what we have deployed, but it was taken within the budget of Air Command. That was one of the reasons we sent them for three months—the limited budget available.

Mr. Leon Benoit: For the SFOR operation in Bosnia, then, $168 million; you will operate within that budget. Is there any sign of an overrun on that?

Gen Maurice Baril: Not that I know of at this time.

Mr. Leon Benoit: Okay.

Mr. Arthur Eggleton: The incremental costs would probably be a very small portion of that. Remember, we do have ongoing costs, and deploying those people in that area helps to fulfil their...

Out of that amount—$66 million, you said?—$2 million is specifically relevant to incremental costs for that operation.

The Chairman: Mr. Pratt.

Mr. David Pratt: Thank you, Mr. Chair.

The question I have relates to our NATO commitments. From the standpoint of training, with Canada having moved out of Europe a number of years ago I suppose the opportunities for interoperability training have been reduced significantly. Obviously we have our continuing commitment in Yugoslavia in terms of working with other NATO forces there, but from the standpoint of the purely defensive role NATO has, and the responsibilities that surround that very specialized role, and with other countries coming into NATO, are we going to be active participants in terms of training exercises at some point in the future, with countries like Poland and Hungary and the Czech Republic?

Gen Maurice Baril: From the maritime point of view and from the air force point of view the two services are training quite regularly with their NATO partners in North America, in the U.S. or in Canada, or in the Atlantic.

In terms of training on the land mass in Europe there is a big exercise happening early next spring called Strong Resolve. We will participate for sure with our maritime forces, air force, and army, and with the immediate reaction force, a battle group. It has not been confirmed because we had a funding disagreement with NATO headquarters as to who would be paying for their transportation from Canada to Europe. We expect to have it resolved by next Monday, actually. If it's the case, then, we will participate with all three elements in this exercise.

Mr. David Pratt: Thank you.

The Chairman: Mr. Jordan, you had a question?

Mr. Joe Jordan (Leeds—Grenville, Lib.): Yes, one quick question.

This goes back to the reserves and the business case made for contracting out. I think the identification of sound business strategy should apply throughout the entire operation.

Given the changing role of the military and the activities other than war-type activities, it would seem to me that seeing as the fiscal environment when the white paper was written has changed a bit, the reference to the reduction in the reserves is a little alarming. I think the reserves can provide a level of flexibility at an extremely efficient cost. You don't have item costs.

There's also the public relations arm of the military. There's tremendous opportunity to make the case for the military. I know in our own militia unit we sent people to the Manitoba flood. There was tremendous support for those kinds of activities.

I'd be very concerned to see the flexible model that the reserves allow fall victim to some kind of bureaucratic survival of the fittest, because I'm not sure the reserve's voice is at the table in a strong enough way. At the end of the day...I don't know whether “buffer” is the correct word, but I think there's a real danger there that they are used to make sure the books balance. I think the changing role of the military is going to require, in an efficient and effective way, the use of reserves, and I think the spin-off benefits from that are tremendous.

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So I'm very concerned by that reference.

Mr. Arthur Eggleton: In fact, all of our direction in the last little while has been to strengthen the reserves, to actually strengthen the size of the reserve component, going up to in fact a figure in excess of what we had previously planned coming out of the white paper, because we recognize that we need a stronger size of reserve force.

We have also given new roles to the reserves. For example, in the naval reserve our new equipment on coastal defence surveillance...the maritime coastal defence vessels are operated entirely by reservists. They're not getting a hand-me-down piece of equipment. They're getting a new piece of equipment, high-tech, with state-of-the-art equipment on it, and that's for them to operate.

We also, in terms of the concept of total force, are integrating the regulars and the reserves on a more frequent basis, giving reservists opportunities to serve in foreign peacekeeping missions such as Bosnia and Haiti. These are things that until recent times were not done.

At the same time, of course, we're looking to rationalize the reserves to make sure that we continue to have a good case for each of these reserve units, and that's a process that's going on right now. But overall we want to strengthen the reserves.

I'll let you take it from there. Do you want to add anything else?

Gen Maurice Baril: I think you said it all, and well.

We are increasing the capability of the reserves. The navy has brand-new ships; the air force has total force units, and also the helicopter squadron. They're using their helicopter pilots to reinforce an operation just like the land force is doing.

The restructuring of the militia is not in order to reduce. Actually, we were close to a decision to reduce to 14,500, but it was changed. We will have 18,500, but we're trying to make it more efficient, a lot slimmer in headquarters. We're not out to crash all the regiments across Canada, because, as you said, this is the link with the community. That's why we want them and want them to be much more efficient operationally across the country. Finally, this is the base for mobilization, all the reserves that we have.

The Chairman: In the 1994 Defence white paper it was stated that a total of approximately 3,000 additional soldiers will be added to the army's field force. How far along are we with this commitment?

Gen Maurice Baril: They are in place. The majority of the 3,000 were given to the land forces, actually, and most went to the front of the unit in the form of added battery, squadron and infantry, all across the land forces. As far as I know, they should all be in place now.

It was a quite long process to increase the combat capability of every unit we had across Canada.

The Chairman: There's no talk, General, about cutting back on these 3,000?

Gen Maurice Baril: We certainly looked at the viability of keeping the 3,000 we had, because we were looking at the complete activity of the land forces. Some readjustment had to be done within the unit, but the combat capability has not been reduced.

The Chairman: So we are going to keep the 3,000?

Gen Maurice Baril: For now, yes. In the review that will be done in the future, it's always open. But I certainly hope we will not be reducing, because the aim is to maintain the combat capability of those units.

The Chairman: Mr. Minister, I thank you and your staff for the ample time you have spent with us this afternoon. I'm sure we are all very grateful for that.

Mr. Arthur Eggleton: Thank you.

The Chairman: The meeting is adjourned.