NDVA Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on National Defence and Veterans Affairs

EVIDENCE

CONTENTS

Wednesday, April 9, 2003

º

1605

The Chair (Mr. David Pratt (Nepean—Carleton, Lib.))

Hon. John McCallum (Minister of National Defence)

º

1610

º

1615

The Chair

Mr. Leon Benoit (Lakeland, Canadian Alliance)

Hon. John McCallum

Mr. Leon Benoit

Hon. John McCallum

Mr. Leon Benoit

º

1620

Hon. John McCallum

Mr. Leon Benoit

Hon. John McCallum

Mr. Leon Benoit

Hon. John McCallum

Mr. Leon Benoit

Hon. John McCallum

Mr. Leon Benoit

Hon. John McCallum

Mr. Leon Benoit

Hon. John McCallum

The Chair

Mr. Joe McGuire (Egmont, Lib.)

º

1625

Hon. John McCallum

º

1630

Mr. Joe McGuire

Hon. John McCallum

The Chair

Mr. Claude Bachand (Saint-Jean, BQ)

Hon. John McCallum

º

1635

Mr. Claude Bachand

Hon. John McCallum

The Chair

Ms. Anita Neville (Winnipeg South Centre, Lib.)

º

1640

Hon. John McCallum

Ms. Margaret Bloodworth (Deputy Minister, Department of National Defence)

Ms. Anita Neville

The Chair

Mr. Bill Blaikie (Winnipeg—Transcona, NDP)

Hon. John McCallum

º

1645

Mr. Bill Blaikie

Hon. John McCallum

Mr. Bill Blaikie

º

1650

The Chair

Hon. John McCallum

The Chair

Mr. Ivan Grose (Oshawa, Lib.)

Hon. John McCallum

º

1655

Mr. Ivan Grose

Hon. John McCallum

Mr. Ivan Grose

The Chair

Mrs. Elsie Wayne (Saint John, PC)

Hon. John McCallum

Mrs. Elsie Wayne

Hon. John McCallum

Vice-Admiral Greg R. Maddison (Deputy Chief of the Defence Staff, Department of National Defence)

»

1700

Mrs. Elsie Wayne

VAdm Greg R. Maddison

Mrs. Elsie Wayne

VAdm Greg R. Maddison

Mrs. Elsie Wayne

Hon. John McCallum

Ms. Margaret Bloodworth

Mrs. Elsie Wayne

Hon. John McCallum

The Chair

Mr. Joe McGuire

»

1705

Hon. John McCallum

Mr. Joe McGuire

Hon. John McCallum

»

1710

VAdm Greg R. Maddison

The Chair

Mr. Leon Benoit

Hon. John McCallum

»

1715

The Chair

Hon. John McCallum

The Chair

VAdm Greg R. Maddison

The Chair

VAdm Greg R. Maddison

The Chair

Mr. Ivan Grose

»

1720

Hon. John McCallum

The Chair

Hon. John McCallum

The Chair

Mr. Ivan Grose

The Chair

Mr. Claude Bachand

VAdm Greg R. Maddison

»

1725

Hon. John McCallum

The Chair

Mr. Joe McGuire

Hon. John McCallum

»

1730

The Chair

Mr. Leon Benoit

The Chair

Mr. Leon Benoit

Ms. Margaret Bloodworth

Mr. Leon Benoit

Ms. Margaret Bloodworth

Mr. Leon Benoit

The Chair

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CANADA

Standing Committee on National Defence and Veterans Affairs

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NUMBER 021

l

2nd SESSION

l

37th PARLIAMENT

---

EVIDENCE

Wednesday, April 9, 2003

[Recorded by Electronic Apparatus]

º  (1605)  

[English]

    The Chair (Mr. David Pratt (Nepean—Carleton, Lib.)): I'd like to call to order this meeting of the Standing Committee on National Defence and Veterans Affairs.

    We are very pleased to have before us today the Honourable John McCallum, Minister of National Defence, with two of his senior officials, Margaret Bloodworth, Deputy Minister, as well as Vice-Admiral Greg Maddison, Deputy Chief of the Defence Staff.

    Before we get into the minister's comments, I would like to recognize the members of the Forum for Young Canadians who are in the room. They are going to be joining us for about half an hour.

    I was speaking you earlier, but on behalf of the entire committee, I would like to extend to you a warm welcome here today. We hope you enjoy the proceedings, and hope you listen very carefully to the questioning and comments by the members of the committee.

    With that, Minister, we'll let you proceed with your statement.

    Hon. John McCallum (Minister of National Defence): Thank you, Mr. Chair. I'm delighted to be back again, I believe for the second time, this time for the main estimates. Previously it was the supplementary estimates.

    I did have a fairly long prepared text, but my deputy minister suggested to me that you might be more interested in asking questions than listening to me speak. So I've decided to make a fairly brief opening comment on a number of issues, and then I would welcome questions from committee members.

    The first point I think I would like to make is a pretty basic one, that having been in this job just over ten months, I have rapidly become committed to doing what I think is right for the men and women of the Canadian Forces. I visited Afghanistan last July, and subsequently Bosnia and many bases across the country. I was always impressed by the professionalism, the courage, and the commitment of these men and women.

    So notwithstanding my limited military background, I became sold on the importance of the military to provide a good defence for Canadians and also to do what is right for the men and women of the Canadian Forces. I think that's the basic perspective I bring to the job.

    What I would like to do in a very brief time is comment on where I've been trying to go and, in some cases, where I plan to go in the future, in six areas. The first of these is the budget, and what we call the “sustainability gap”. After becoming minister, I learned that there was a gap between the size of our budget and what we were committed to do. That gap had been estimated by the department to be in the neighbourhood of $1 billion, or a little bit less than that--or, as my predecessor put it, he had a $12-billion budget and a $13-billion program.

    That gap showed up in problems associated with excessive personal tempo, too much time away from home for too many our members. It showed up in the form of having to sometimes mortgage our future in the sense of not spending enough on capital. So my first priority was to close that gap.

    I'm pleased to say, as you know, that in the last budget that gap was eliminated in a single year. I was delighted that there was an $800-million-per-year increase in base funding immediately, starting this year, as well as a number of one-year injections of funds, adding up to substantially more than that. But the base funding went up by $800 million per year.

    The second element related to that is cost reduction and increased efficiency. I made the commitment to find an additional $200 million per year in savings, internally generated savings, that would be added to the $800 million to give a $1-billion-per-year increase in the budget for these initiatives to close the sustainability gap.

    I'm pleased with this initiative, partly for what you might call tactical reasons. If I had not come up with the $200 million in internally generated savings, I think I would have gotten less than $800 million from the centre. As well, philosophically, I think, government has a responsibility to get maximum value for the taxpayer. As I've said before, I believe if a person with a $12-billion budget can't find $200 million in savings--that's less than 2%--they should be in another line of work.

    As you know, I have an efficiency group of four outside experts. We're actually meeting this evening to discuss the interim progress they've made on this file.

    The third area I'd like to mention is Canada-U.S. relations, or defence of North America. Although, as we all know, Canada and the United States came to different conclusions on Iraq, one bedrock constant has been our joint defence of North America. We go back to at least 1940, with the Ogdensburg agreement, where the two countries have committed themselves to work together to defend the continent.

º  (1610)  

    First of all, there was the Nazi threat in the forties. Then we had the Soviet threat during the Cold War, leading to the creation of NORAD. More recently, since September 11 we've had the terrorist threat. As a consequence of that, we have gone overseas to join in the war against terrorism in Afghanistan, and internally, at home, we have worked more closely with the Americans on this file.

    In particular, in the context of defence, we've created the Canada-U.S. joint military planning group, lodged in NORAD, which has the double objective of, one, reducing the risk of terrorist attack by working more closely together and sharing intelligence, and two, should such an attack occur, working together to minimize the cost, or the loss of life and property.

    The fourth element I had mentioned is the international. Here I'd mention our ISAF mission to Afghanistan, which is another new development since I last spoke to you. The government has committed to sending approximately 1,500 soldiers for a period of 12 months to Afghanistan, beginning in August or September of this year, to form with a battle group in a brigade headquarters, working probably with the Germans, although that is not for sure yet.

    I think this reflects our ongoing commitment to the war on terrorism and our commitment to Afghanistan, both in terms of providing security and helping to promote stability and development. But no one should think this is an easy mission.

[Translation]

    This promises to be a difficult and sometimes dangerous mission, as evidenced by the rocket attacks last week on mission headquarters. We will need to demonstrate strong negotiation skills and show sound judgment in difficult situations, along with empathy and respect for the local population.

[English]

    I think it's these very qualities--empathy for the local population, good judgment, and negotiation ability--in combination with the more standard characteristics of a military that make up the strength of our Canadian Forces. So I think we are well equipped to undertake this important responsibility, although no one should think for a moment that this is in any way easy.

    I might mention in that context that we're having discussions with our NATO partners in the hope that the NATO role will become more substantial in this Afghanistan mission, as that would further improve the continuity of those missions to better serve Afghanistan and our commitment to fight terrorism.

    Fifth and second to last,

[Translation]

    there is the matter of adapting to the situation. Military forces around the world have no choice because everyone must contend with the same technology and the same environment. As far as the environment goes, the situation is radically different than it was before the end of the Cold War and prior to September 11. The environment has changed dramatically for everyone.

    Secondly,as we witnessed in dramatic fashion during the war in Iraq, military technology has evolved considerably. Everyone is facing the same challenges, not just in terms of technology but in terms of the global environment.

[English]

    So we, like others, must adjust, adapt, and make difficult decisions in transforming ourselves for these new realities that all of us face.

    Sixth and finally, people: I started with people as motivating me, the well-being of the people, the men and women of the Canadian Forces, and I'll end with a few comments on people.

    I think my predecessor, Art Eggleton, deserves praise for always putting people first. Over the last five years, under his period in office, there have been substantial improvements in terms of salaries, health care, family facilities, treatment of post-traumatic stress disorder, and things of this nature.

    As well, I'm committed to further progress in such areas as education and training. We have appointed a number of highly eminent educators to provide advice in this area. We have made progress in terms of the coverage of the payments made for dismemberment, though more work remains to be done. I'm also intending to improve performance in terms of bilingualism.

    I might mention finally, and I suppose this might have come under transformation, that we have signed on to phase two in the financing of the reserve restructuring. We are committed now to increasing the number of reserves according to the plan that has been in place for some time but had not been financed. The reserves are the footprint of the military across the country, and many MPs will be aware of this, having reserve units in their ridings. So we are definitely making progress in that area.

    That's it, Mr. Chair. I'd be very happy to answer any questions.

    Just to summarize very briefly, I've commented on the budget priorities, which I think we've succeeded in achieving; my commitment to improved efficiency through this efficiency group, which is currently at work; progress on the Canada-U.S. front in terms of the planning group, and we continue to work on this file; internationally, the major new development I mentioned was our Afghanistan commitment; and the ongoing commitment to transformation and the well-being of the men and women of the Canadian Forces.

    Thank you very much.

º  (1615)  

    The Chair: Thank you, Mr. Minister, for your comments. You've certainly provided us with a very interesting menu of issues to chew on today at committee. I expect we are going to have some interesting questions.

    Mr. Benoit, for seven minutes.

    Mr. Leon Benoit (Lakeland, Canadian Alliance): Thank you, Mr. Chair.

    Good afternoon, Mr. Minister, Vice-Admiral, and Ms. Bloodworth. Thank you for coming.

    Contingency financing was mentioned in the budget to deal with some past operations and a lot of current and future operations. There are some potential future operations, and that's what I'd like to ask about first.

    What about our military being involved in a reconstruction in Iraq? Will that be happening, and if so, how?

    Hon. John McCallum: Certainly the Prime Minister has committed the government to an involvement in humanitarian aid and reconstruction of Iraq. Military has not been mentioned explicitly, and our principal military contribution in terms of that region is the ISAF commitment in Afghanistan, of 1,500 soldiers for a period of 12 months. In addition, of course, we have commitments in Bosnia and elsewhere in the world.

    I think my military friends would certainly advise me that in terms of our capacity to generate additional military people for Iraq, given the operational tempo issues, we would be hard-pressed.

    So no firm decision has been made, but I think my best answer would be to say that we would be hard-pressed to make a substantial military contribution in Iraq's post-war phase, although the government is certainly committed to making contributions in other areas.

    Mr. Leon Benoit: Okay, so no peacekeeping mission in Iraq is planned, even, say, a year from now.

    Hon. John McCallum: Well, I didn't say.... As I said, no firm decision has been made, and a year from now we may have been able to reduce our commitment in Bosnia. We will be halfway through our ISAF commitment, so it's possible, as more time goes by, that more resources would become available. But in the short to medium term, at least, I would say we're already quite stretched.

    Mr. Leon Benoit: About the Canadian soldiers who are currently serving in Iraq along with our American allies and the Brits, and the Australians I believe, as I understand it, there are 31 members serving as foreign exchange officers right now, and they may be in an area where the normal insurance doesn't cover them.

    Now, you did mention a week or two ago the possibility of declaring it a special operations zone, or finding some other way to ensure that our military personnel serving there are covered in case something should happen to them.

    In fact, are they covered 24 hours a day for the operation they're involved in now, and if so, how is that coverage accommodated under the rules that are in place?

º  (1620)  

    Hon. John McCallum: What I said in the House, and what I repeat now, is that they are fully covered in the sense that the rules that applied in terms of coverage to our soldiers when they were in Afghanistan would apply equally to those small numbers who are currently in Iraq. Or to put it differently, the coverage received by the exchange soldiers who are currently in Iraq is the same as they would get were Canada involved in the war, which we are not.

    So they're not being penalized in any way for the fact that we are not involved in the war. They are treated the same.

    I understand that Iraq is already a special operations zone. If you want to ask questions about specific aspects of that coverage, I'd perhaps refer to the deputy, but in general I can tell you that they are not penalized or discriminated in any way for the fact that Canada is not a party to this conflict.

    Mr. Leon Benoit: But the situations are entirely different. In Afghanistan, I understand, it was declared a special operations zone, but in Iraq, the government, or you, have said on a regular basis that our soldiers are not involved in combat there. So how is it they're accommodated so that they are covered fully by insurance?

    Hon. John McCallum: I just told you that Iraq had already been declared a special operations zone--

    Mr. Leon Benoit: By whom, and how is--

    Hon. John McCallum: --so that issue does not arise. I'm telling you, they are not penalized in any way for the fact that Canada is not a party to the war.

    Mr. Leon Benoit: Yes, but my question is, how is that being accommodated? You say it's been declared a special service area. How did that happen? Did it pass through cabinet? Did cabinet declare it a special service area?

    Hon. John McCallum: My understanding is that this had been the case for some months or years before this. As the deputy says, I think this declaration of Iraq goes back to the first Gulf War. So it never came off the books; it's still there.

    Mr. Leon Benoit: But it has to be a combat zone, doesn't it, to get that kind of declaration?

    Hon. John McCallum: There certainly is combat going on there, and it has that legal designation that has continued from the first Gulf War.

    Mr. Leon Benoit: Well, then, if Canada was at war during the first Gulf War, and the designation is still there and applicable, how is it they're not at war now, and yet your government has said again and again that Canada isn't now at war, in Iraq?

    Hon. John McCallum: The reasons for Canada's decision have been explained many times by the Prime Minister and the foreign minister. I could go through them again, if you wish, but in terms of fairness for our soldiers, the fact that we are not as a country involved in the war does not really affect the degree of danger to which they are subjected.

    I've said many times that we thank them for their service. We support them 100%. I think it would be unfair if they were in any way penalized for the risks they are subjecting themselves to just because we as a government have decided not to participate in the war.

    We've decided not to participate in the war for reasons we believe to be very cogent, but we are not in any way reducing the benefits our soldiers receive as a consequence of that decision by the government.

    The Chair: Thank you, Mr. Benoit.

    Mr. McGuire, seven minutes.

    Mr. Joe McGuire (Egmont, Lib.): Thank you, Mr. Chairman.

    I'd like to welcome the minister to our committee and to congratulate him, first of all, for being able to add $800 million per year to the baseline budget, and the $1 billion you were able to get for this fiscal year. In ten months, you've done quite a bit in getting extra dollars, and much-needed dollars, I should add, for your department and for the activities of our military.

    In your message prefacing the estimates, and I'll quote you here, you say:

We can no longer afford to invest equally in the capabilities or structures of the past. Given the nature of the revolution in military affairs, and given the costs of new technologies and high-end military platforms, we cannot afford to maintain parity across the board with the United States, or Britain or France for that matter, nor have we in the past. That means being guided by new fiscal, technological and strategic realities to make selective, strategic choices on what capabilities we will invest in, what new concepts and capabilities we will pursue or ignore, and what old capabilities we will maintain, reduce or eliminate.

    Now, can you give us an idea of what these new ways of spending are? What are you going to drop, or what do you need to spend on in order to try to keep up? You can't really keep up with the Americans, who are spending over $1 billion a day on their military. Our budget would last a couple of weeks in Canadian dollars.

    So what can we do to remain interoperable with the Americans and with the Brits and with our allies, and just where are we going to invest or reallocate these dollars?

º  (1625)  

    Hon. John McCallum: Thank you very much for that question. I think it's a question of crucial importance. In a sense, it's the question. I don't have a fulsome answer for that question, because this is something we are working on, and we will be consulting. We're committed to a defence review at some point. I can give you some information.

    I believe very strongly, as I said in my opening remarks, in the need to transform ourselves. We, like other militaries, are driven by a radically evolving technology and by an enormous change in the environment in which we live. We're also a relatively small military, although, you know, every country is, relative to the United States; the United States spends about twice as much as the rest of NATO combined.

    So I think we have to, as I said, make choices. If you are transforming, the last thing you want to do is give every unit the same percentage increase. You have to grow in some areas and shrink in other areas, and not do things that you used to do that are lower priority, and do more to get critical weight in other areas. So this is the discussion and the process we're into. It will be more public when we get into a defence review. I've just named a couple of areas where we have made decisions.

    In terms of the revolution in military affairs, a lot of the high-tech war you see on CNN--which is unfortunate, because we don't like war, but it is going on, and you see it every day on your television sets--is based on information, and the transmission of information from the commanders to the people on the ground, and making everybody aware. The success of the operations with relatively few casualties, as wars have gone in the past, owes a great deal to this information technology applied to the military. One project that is in that direction, which I'm committed to, is ISTAR, which improves the communication capabilities of the army.

    On the negative side I've also suggested, or stated, that we will not be unilaterally engaged in purchasing large numbers of C-17s for strategic lift, because if you're going to do more of something, you have to do less of something else. Out of all the NATO countries, only two--the biggest two, U.K. and U.S.--have their own strategic lifts. So I've suggested we might work cooperatively with other countries to get some kind of sharing arrangement, but we're not going to spend the billions that would be required to unilaterally acquire a large number of these aircraft.

    So in other areas, we're still working. Interoperability is key, and I think the navy in particular has achieved a high level of interoperability with our allies, certainly including the United States but not only the United States. That's evidenced by the task force that we see in operation in the gulf today, with Canada and five other countries. To maintain and improve that interoperability with our allies is a key consideration.

    As time goes by, I will be able to make more specific statements, but that gives you some idea of the direction.

º  (1630)  

    Mr. Joe McGuire: One of the capabilities you decided to replace is the helicopters. Can you give us an update on where we are with the purchase of our new helicopters?

    Hon. John McCallum: Yes, I'd be very happy to do that.

    There is one major change I made since becoming Minister of National Defence, and that is what you might call rebundling the contract for the maritime helicopter project. What we had were two separate contracts, one for the body and one for everything that goes inside the body, and we changed that into a single contract.

    I think there's a general consensus, in industry and elsewhere, that this is a good move, first of all because it means we'll get the helicopters faster. You'll get them faster when you have one contract than if you have two. And second, there's less risk that there will be an incompatibility with the two parts if they're all made by the same group.

    That was the major change. We're now pressing ahead, and my objective is to get this helicopter as quickly as possible. I'm working very closely with the Minister of Public Works to achieve that. We're hoping to have a decision early next year, I would say, as to who the winner is. After that, we'll get into the delivery phase.

    The Chair: Thank you very much, Minister, for that response.

    Monsieur Bachand.

[Translation]

    Mr. Claude Bachand (Saint-Jean, BQ): Thank you, Mr. Chairman.

    I too would like to take this opportunity to welcome the minister and his colleagues. I do not have any questions concerning Iraq. I have asked many questions about this in the House lately and I maintain that Canada's position is inconsistent. However, you've already answered many questions on the subject. I would be wasting my time if I were to ask about the conflict again, because no doubt your answer would be the same.

    You indicated in your opening statement that you had eliminated the $1 billion gap in the budget. The AG said that the department had been allocated a budget of $12 billion budget, but had actually spent $13 billion. That was my understanding of the situation. However, you emphasized the importance of eliminating this gap, given the numerous rotations and the fact that many members of the military were sent on missions too often, thereby jeopardizing in the process the capital budget. As a result, there wasn't enough money left in the budget to purchase new equipment.

    I'd like to talk about operation ATHENA which is slated to take place in Afghanistan this summer. Last week, I asked General Jeffery if he had impressed upon you the importance of going to Afghanistan and whether he told you that we had the military capability to embark on this mission. He indicated to me that he had been consulted and that he had recommended to you that we not send troops to Afghanistan as this would, in his view, put even more pressure overall on Canadian forces, given our current commitments, specifically to the SFOR in Bosnia-Herzegovina. Why did you disregard General Jeffery's recommendation? That's my first question.

    Secondly, I've also observed that Canada is taking part in fewer and fewer UN operations. You mentioned one such operation, as well as the ISAF. I was surprised to hear you say that control over the theatre of operations in Afghanistan should be transferred to NATO. My feeling is that the UN is poised to regain some of its lustre. I don't see why the UN should be cast aside and control over operations in Afghanistan transferred to NATO. I just don't understand that.

    Thirdly, rumour has it that since the Canadian military will be incapable of doing all of this, that is take part in the SFOR in Bosnia-Herzegovina, Operation Apollo and the deployment in Afghanistan, the government is poised to pull its troops out of Bosnia-Herzegovina in order to meet its commitments in Afghanistan.

    I'd appreciate answers to these three questions.

    Hon. John McCallum: Thank you.

    First of all, I do not receive recommendations from General Jeffery. I receive recommendations regarding the military from General Henault, the Chief of Defence Staff. General Henault may have consulted General Jeffery, but these were in the nature of private consultations. As Minister, any recommendations I receive come from General Henault. He advised me that from a military standpoint, our military had the capability to make this kind of commitment.

    You asked me if this mission would result in more problems from an operations standpoint. If we did not take part in this mission, there would be no such problems, but according to General Henault, our participation is feasible. That was the military advice I received. Of course, the decision as to where to deploy Canadian forces in general rests with the government.

    In light of the high priority assigned to the war on terrorism, given that a month or so ago, we indicated that we may not be committing more troops to Afghanistan, and given the capability of our troops of carrying out their mission in Afghanistan, the government felt it was important to proceed with this mission, a mission that according to General Henault, is militarily feasible. Therefore, we went ahead and made the announcement.

º  (1635)  

    Mr. Claude Bachand: And what about NATO and the UN?

    Hon. John McCallum: I'm getting to that.

    I believe there's a problem with the figures being quoted. Our troops are participating in a peacekeeping or security mission in Bosnia. This is similar to a UN-mounted operation, even though they're operating under the auspices of NATO. To get a clear picture of our involvement, perhaps we should combine the UN and NATO figures.

    It's a fact that relatively few Canadian Forces members are currently deployed on UN missions. It's not that Canadian Forces are not involved, it's that they are operating under the auspices of NATO in Bosnia. They are part of an important peacekeeping force, even though this mission is led by NATO, not the UN.

    As for the ISAF, this operation is aimed at improving security, helping the Afghan people and creating security conditions conducive to economic growth.

    Our operations in Bosnia and in Afghanistan are truly in keeping with the Canadian tradition of Leaster Pearson, even though these missions are not being conducted under the auspices of the UN.

    Thirdly, as far as withdrawing our troops, yes, we've already done that. However, Canada is not the only country to have done so. All NATO countries have withdrawn some troops. These troops cannot remain in the region indefinitely. Our hope is that conditions in the region will stabilize and that in time, as the situation improves, there will be no need to maintain the same troop strength. We have approximately 20 per cent fewer soldiers in the region than we had one year ago. The same is true of other NATO member countries.

    Two more things: conditions in the region may stabilize further, resulting in a further reduction in troop levels for all countries as well as in a reduced presence by the European Union in Bosnia. That's also a possibility. Therefore, further reductions in Canadian Forces levels in Bosnia are possible in the coming year.

[English]

    The Chair: Minister, thank you for that response.

    Ms. Neville.

    Ms. Anita Neville (Winnipeg South Centre, Lib.): Thank you.

    I don't mind if the minister finishes with my colleague's third point, and I will get my question on the table as well.

    I note that the capital expenditures are less than originally projected. You've in part responded to Mr. McGuire's question, but the capital expenditures are lower than projected in last year's main estimates. My question is, what are you not doing that you were originally planning to do?

º  (1640)  

    Hon. John McCallum: Thank you for that question. I will give a general answer, and then perhaps my deputy minister can give you the real facts.

    The general answer...you know, the last year was before we had this $800 million injection, and we're hoping to increase the capital budget this current year with part of that additional money. But the general phenomenon is because we were underfunded, and the government acknowledged that.

    Being underfunded, you have to sort of live day by day, and do what is essential to get through the day. It's like an individual who has to spend all his or her money on groceries and doesn't have money to repair the house. Sometimes that was the situation in which the military found itself, and that was one of the main reasons why I made the argument that we needed a budget increase to close this sustainability gap.

    As to what precise projects were cancelled because of this reduction, I would ask Margaret Bloodworth to address that.

    Ms. Margaret Bloodworth (Deputy Minister, Department of National Defence): Let me start with the more general. There's no question that, over the last couple of years....

    When you have a gap in a budget, you have to find the money somewhere, and the most obvious place to look for it in defence is in the capital budget, in view of the size. So during the course of the past year there was a movement of $200 million or $300 million out of capital into operating. That's not the first time that's happened. That's happened before. And now, with the $800 million, we are proposing to add back in. It will take a couple of years to build up, but we will do it.

    What has happened when that has come out...although a couple of hundred million sounds like a lot of money, what it effectively does is shift things to the right, as they say. For example, with the Aurora modernization, which is about a $1 billion project, we could have done more of it in the last couple of years if we had more money. We will spread it out over more years, similarly with the CF-18 project.

    The other difficulty you have with robbing from capital, if I can put it that way, is that in the end, you don't have as well-thought-out and well-planned a capital budget over time, because the very nature of capital means you should be planning out five to ten years. If you're never quite sure of the amount, because you have to take from it, inevitably you end up doing a number of smaller things, because you're not sure whether you'll have enough for the bigger ones. So we're hoping to remedy that as well.

    But on what has been delayed, the short answer is that we basically have delayed some projects and pushed some out for the years. I think probably the best examples of those are the CF-18 modernization and the Aurora modernization.

    Ms. Anita Neville: Thank you.

    The Chair: Thank you, Ms. Neville.

    Mr. Blaikie.

    Mr. Bill Blaikie (Winnipeg—Transcona, NDP): Thank you, Mr. Chairman.

    I'd like to just pursue this matter of the Canadian government exploring whether or not NATO would be willing to take over, if I'm hearing you right, the responsibilities that Canada has agreed to in Afghanistan.

    I wonder, do you not see this as somewhat contrary to the principles that the government has outlined with respect to the war in Iraq, that to have NATO oversight, as opposed to... I know there was no UN oversight in the first place, of the operation in Afghanistan, but why wouldn't the government be seeking...

    If in Iraq it refused to participate on the grounds that the UN hadn't approved the war in Iraq, and if, in the reconstruction of Iraq, the government position is that the UN should be involved, why would it be the government's position that in the ongoing reconstruction of Afghanistan the military component be under NATO, rather than in some way transferred to the United Nations?

    Hon. John McCallum: There are a few points in there.

    One, I'm not suggesting this in your case, but there is a misconception in some places that somehow we want NATO to move in there to reduce our own level of commitment. That's not true. We are envisaging on the order of 1,500 soldiers, with or without NATO.

    The advantage of NATO is that it ensures a continuity. NATO provides certain functions, such as airport management and hospitals, that other countries cannot provide, and NATO has a function in ensuring the continuity, that a country replaces another country, and it provides a greater stability to the process. It's not really that NATO controls it.

    The ISAF mission is UN-mandated. It is operating under a mandate from the Security Council of the United Nations already. And I think the NATO injection is a good idea, from an Afghanistan point of view, to bring greater stability to that country.

º  (1645)  

    Mr. Bill Blaikie: I just see a danger in creating more and more opportunities for out-of-area operations on the part of NATO, even though in this case they might not be aggressive operations but ongoing kinds of operations. I know that's a debate that's gone on in NATO for a long time, because I've been at lots of North Atlantic Assembly meetings. It just seems to me that calling on NATO to play a role in Afghanistan would be calling on it to set one more precedent in terms of out-of-area operations.

    I wonder whether this has been the object of any internal debate within the government, because this is not an insignificant thing to ask for; this has ramifications.

    Hon. John McCallum: I'm glad you raised that question, because it gives me an opportunity to answer it. The position you articulate sounds somewhat like the French position...or perhaps I shouldn't characterize other countries. In any event, there's one school of thought that seeks that NATO remain in Europe. Canada doesn't share this view, because for us the trans-Atlantic link is extremely important. It's one of those multilateral international institutions that we regard as extremely important. NATO is vital for the trans-Atlantic military link.

    If NATO remains in Europe, in the post-September 11 world, where most of the difficulties are no longer in Europe--there's no more Cold War, although there are some difficulties, obviously, in the Balkans--in order to maintain a role for NATO and a relevance for NATO, as well as the continuity of the operations in Afghanistan, I would regard it as a positive for NATO to expand its mandate to go out of area, in this case to Afghanistan. It is in Canada's interest to have a maximum role for these multilateral international institutions.

    In this case it's a trans-Atlantic military alliance, NATO, which we have supported from the beginning, and which we want to see flourish. I think this move is good for not only Afghanistan but it's also good for NATO to have a more prominent role and a greater relevance in the post-September 11 world.

    Mr. Bill Blaikie: I'll just follow up on that, Mr. Chairman.

    I'm sure the minister is probably relieved to outline a position that is not associated with the French, but the fact of the matter is, I'm not advocating that NATO....

    I mean, NATO isn't just about Europe, it's about north Atlantic defence, which is appropriate. It seems to me that one could argue that the government is undermining on the one hand with what it's trying to do on the other hand. If you're advocating a greater role for NATO, for instance in Afghanistan, at the same time as you're making the argument for multilateral United Nations action in Iraq, I see a rivalry, frankly, between NATO and the United Nations.

    I've experienced that at North Atlantic Assembly meetings, where particularly American delegates, but not only American delegates, get up and say, “The UN is useless. NATO needs to do what the United Nations used to do. We need NATO as the police-keeping force in the world that so many originally intended the United Nations to be.”

    So to the extent that the Canadian government still intends that the United Nations should be that, I'm just suggesting to you that by advocating this role for NATO in Afghanistan, you may well be working at cross-purposes to goals that you're working on elsewhere.

º  (1650)  

    The Chair: Can we get a 30-second response on that, Minister?

    Hon. John McCallum: I agree that this could conceivably happen on some occasions. I do not think it is true in this case, partly because the Afghanistan mission already has the United Nations security mandate, and partly because I see the role of NATO as ensuring the continuity of that mission.

    So I don't really see it as being in competition with the United Nations in this case.

    The Chair: Thank you, Minister. Right on time.

    Thank you, Mr. Blaikie.

    Mr. Grose.

    Mr. Ivan Grose (Oshawa, Lib.): Thank you, Mr. Chairman.

    Minister, I'd like to return to my favourite subject--you'll get used to me on this--and that's the reserves, the militia, or whatever you want to call it. I get a lot of questions from my local militia, possibly because I like using the bar in the officers' mess, or possibly because it's the only bar I know that will give me credit.

    Some hon. members: Oh, oh!

    Mr. Ivan Grose: My regiment is the Ontario Regiment. It's a tank regiment. They had tanks at one time. They took the tanks away and gave them APCs, and said to pretend the APCs were tanks. Well, then they came for the APCs and took them away; I think they sent them to Bosnia or somewhere. Then they gave them some trucks and said to pretend the trucks were APCs, which were pretending to be tanks.

    The point I'm making is that they don't have what they're supposed to have. If they're not going to be a tank regiment, then fine, let's make them an infantry regiment. And I'll get some flak about that when I go home.

    They're woefully short of equipment. If it isn't boots, it's uniforms. If it isn't that, it's something else.

    In a sort of throwaway line there, you said there would be more money for the reserves. I'd like you to confirm that.

    I have one more question. Have you ever considered setting up separate funding for the reserves rather than channelling it through the regular forces? I do believe that when the regular forces get pushed for money, the first place that gets cut is the reserves. I would do the same thing if I were in their position. It's just that the reserves, who we count on for our missions now--up to a third of the people we use in our missions are reservists--do not have the equipment for training. In fact, they don't have enough money for rations when they go in the field.

    It seems that we're starving them, but then when we need them, we ask them to be there. They are ready, and they are there, but I'd like to see them get a better break.

    So two questions, the first about additional funding, and the second about a separate budget.

    Hon. John McCallum: Thank you very much. And I'm glad we don't have to be totally serious all of the time.

    I am serious, however, in terms of the reserves. It's a fairly substantial commitment to go up by 750 people in one year. We had a lot of talk for quite a long time about this phase two, but it had not been funded despite expressions of wishes by the government that it would be. So part of the $800 million I got is devoted to reserves.

    The amount that we expect to increase for the reserve pay account, operating budgets, and clothing and individual equipment procurement accounts, some of the things you were talking about, will be around $15 million to $20 million per year, with this increase.

    So, yes, I'm aware, and I hear frequently about these problems of lack of equipment and so on. I certainly can't guarantee perfection, but with this injection of funds, I'm hoping there will be visible improvements in this area over time.

    I might also mention that in terms of the review--the admiral has just passed this to me, but I saw it myself--the reserves are doing excellent work in Bosnia. When I visited Bosnia some months ago, I visited the all-reserve company. Well, it's two or three regulars, but almost all-reserve company. They're really doing a fantastic job. We're intending to send another one in the not-too-distant future.

    So the reserves are doing really important work in that area. We are increasing their funding, and I think, over time, their roles should increase also in what Americans call “homeland defence”. I'm not sure if we use that term, but it's guarding the country in the event of terrorist threats. I think that's a natural role for the reserves, because they're spread out across the country and they're in many small towns across the country.

    So we are committed to that. We've put our money where our mouth is, at least to a significant degree, and I hope to see improvements.

    I have discussed--

º  (1655)  

    Mr. Ivan Grose: How about a dedicated budget?

    Hon. John McCallum: I know there have been tensions between reserves and regulars for over 100 years, probably since either of them existed--or since both existed, because you need two to have tension. But we don't want two armies. I've discussed this with regulars and I've discussed this with reserves. And I don't think we want the additional layers of costs that come with two separate armies.

    So what we have to do is find some safeguards, find some transparency, to ensure that what is committed to the reserves actually goes to the reserves, because the slippage can go either way. In recent years I think the regulars have been subsidizing the reserves. Some other years, no doubt, it's gone the other way. So you have to be transparent and clear on the financial side, and I'm working to try to ensure that this is the case.

    But we don't want to move to two armies and gobble up money in creating more bureaucracies to run two separate armies.

    Mr. Ivan Grose: Thank you, Mr. Chair.

    The Chair: Thank you, Mr. Grose.

    Mrs. Wayne.

    Mrs. Elsie Wayne (Saint John, PC): Thank you very much.

    Mr. Chair, I'm probably going to shock you, because I only have my questions now, and then I have to go to another meeting.

    Look, the minister is smiling at that. He's so glad I'm not going to be here to question him the second time around.

    At any rate, my first question has to do with the submarine capability life extension. That project was estimated at a total cost of $807 million. My understanding is that, to date, just over $522 million has been spent on the project, with the remaining amount scheduled to be paid over the next four years or so.

    Now, the committee had understood that the cost of the submarines was going to be about $750 million and covered by a series of lease-loan programs with the British armed forces.

    Could you please tell us, Mr. Minister, how much of that $807 million will actually come out of your departmental budget?

    Hon. John McCallum: Perhaps I can ask you a question. Would you like me to give information I now have with regard to your question in question period, or would you like me to address this question?

    Mrs. Elsie Wayne: You thought I was going to ask that one again, didn't you.

    Hon. John McCallum: Let me start with the question period question.

    As I told you in question period, I had never heard of this incident, or this case. Admiral Maddison is the Deputy Chief of the Defence Staff who's in charge of operations, and I asked him after question period...and I would ask him now to provide you with that information.

    Vice-Admiral Greg R. Maddison (Deputy Chief of the Defence Staff, Department of National Defence): Thank you very much, Minister.

    Mrs. Wayne, it's good to see you again.

    This is an issue that I certainly was made aware of. It was an oil cargo vessel. Its flag was from Belize. There were a number of Iraqis on board, who were the crew of that vessel. The task force commander decided that he wished to board that vessel and determine what its cargo was. It was a consensual visit. That is to say, the master said, “Please come on board.”

    The determination by the boarding party and the task force commander was that this vessel was going about its legitimate business. They did find a number of atropine vials on board. Atropine is a self-protection mechanism or capability that if they found themselves where nerve gas perhaps might have been used by somebody else, they could protect themselves. They found a couple of gas masks. So these were all self-protective measures.

    This information was passed to the commodore, and he subsequently passed it to his operational commander, who was an American. They had a discussion on this--it was totally legitimate--and decided that the vessel should be cleared. The vessel was cleared and allowed to proceed on its way and was not boarded subsequently thereafter by anybody else.

    This was a routine operation. As you know, Canadians take the bulk of the boardings in the theatre, doing a terrific job in that regard. But it was a routine boarding.

»  (1700)  

    Mrs. Elsie Wayne: It was routine. The information we received was that when they examined the ship underwater, they concluded that the crew were Iraqi agents laying mines in the gulf. That wasn't true?

    VAdm Greg R. Maddison: Not at all, Mrs. Wayne.

    Mrs. Elsie Wayne: All right. That's fine.

    Thank you very much.

    VAdm Greg R. Maddison: You're welcome.

    Mrs. Elsie Wayne: Now, are you going to answer my other question?

    Hon. John McCallum: You've given me a little more time to think about submarines.

    I'm going to refer the financial issue to the deputy minister. You know, the submarines have had teething problems. I've asked for an investigation internally, which is now being undertaken, on why this is. I won't say when we'll arrive at the resting point, but I want to get some clear information as to the likely future time involved, and costs.

    I'm concerned, as I think you are, that we've had a number of negative surprises on this file. I do think that in a way it might be not unusual that when there is a new project, perhaps there's a human tendency to underestimate the glitches that one might find along the way. More often than not, some of these glitches do happen, and then ultimately, hopefully, we will get a good product. But it tends to take longer and cost more than the initial estimates.

    So I am concerned about this, but as for the specific numbers, I would turn that over to the deputy.

    Ms. Margaret Bloodworth: Thank you, Minister.

    On the first question, all of the money will come out of the defence budget, whatever the cost is.

    In terms of the $750 million versus the $807 million, that has to do with inflation, basically. There was one year...that is current year, the first year it was talked about, and then there is some inflation. That's what that number is.

    On the issue the minister is referring to, the purchase price of the submarines has not changed. The issue that we're looking at having a review on right now involves the questions on the number of spares bought, the number of years of first maintenance that we have one contract with--those types of things, including some of the defects that have gone on. But as to the actual purchase price, the only difference was inflation.

    Mrs. Elsie Wayne: I'd just like to follow up, Mr. Chairman, if I may.

    Could you tell me, Mr. Minister, why we would buy these used submarines? The British, when they ground them and say that's it, then that's the end of it. Why would we go out and buy used submarines and not go and get them new submarines, even if we only get one at a time?

    Hon. John McCallum: The admiral might have further comment, if he has time, but basically it was a fantastic deal. Even if the cost escalation is 50%, to get them new would be four or five times what we're paying. And we have other countries' experience, where they're taking just as long or longer, spending way more money.

    By submarine standards, I don't think it's so bad. If you say something is going to cost $100 and it ends up costing $200, but the alternative was $500, then you have a good deal. But when you first say it's $100, you're turning a good news story into a bad news story.

    So even though the media is bad, ultimately I think it might be a very good buy, and I think in today's world of terrorism, a submarine is a useful thing to have.

    The Chair: I think we're going to have to leave the answer there, Minister.

    Thank you, Mrs. Wayne.

    Mr. McGuire, five minutes.

    Mr. Joe McGuire: Thank you, Mr. Chairman.

    I just want to comment on the pin we're wearing today, the Vimy Ridge pin, and the fact that we're meeting under the Vimy Ridge painting. It's a long time coming that we've recognized it. Many people think that's the day that Canada actually became a nation, when we made the great sacrifice at Vimy Ridge.

    The last time we were together, last fall, I asked you about the JTF-2, and you said you were going to make them more open, maybe decorate them because of the great job they did in Afghanistan, and maybe increase the force. What progress have you made in that since you were here last?

»  (1705)  

    Hon. John McCallum: I certainly share your sentiment on Vimy Ridge. I think it's too bad we didn't do this when more were alive, but better late than never. It's great to be recognizing that date today.

    Since I was last here I actually visited JTF-2, after trying several times, and changing for scheduling reasons. I was extraordinarily impressed with their activities. The government decided, two budgets ago, to double the capacity of JTF-2. That doesn't translate into quite doubling the number of people but doubling the capacity of the group to undertake operations, both at home and abroad.

    Again, in the post-September 11 world, I believe we're talking about transformation and rapid deployment ability. I think special forces are extremely important. This decision was nothing to do with me, but I think it was a wise decision to double that capacity. Again, if you look at your televisions, you can see that the special forces are playing a very important role in Iraq.

    I'm pleased that we are doing that doubling, that this process is under way, and that good progress is being made. They have very high standards of physical fitness. You know, not many people can qualify, so there was some concern that it would take more time than expected to get up the numbers. However, I'm told that they're making good progress and they're on target, even though the standards are very high. So I think all of that is going well.

    The other issue you raised is the issue I raised the last time I was before this committee, that if they're so good--and I believe they are--then maybe we should tell Canadians a bit more about them, because Americans know about their special forces, and the British, and we seem to keep this from Canadians.

    Of course, here one needs to have a balance, because the last thing one would want to do would be anything to jeopardize the safety or security or ability of the JTF-2 to carry out their operations, and certain kinds of publicity would clearly run risks. On the other hand, I think it's good for the citizens or the taxpayers to have some idea of the great accomplishments of this part of their military.

    Progress has been a little slower than I might have hoped. That's par for the course. But a videotape has been produced that we're looking at, and we are certainly engaged on that file.

    I'd say there's a certain sensitivity in some quarters, including perhaps the person on my left, in terms of moving too quickly on this, because there's a lot of concern, and justified concern, about the security of the operations.

    But we haven't forgotten about it, and the provisional first version or first cut of a video has been made.

    Mr. Joe McGuire: Thank you very much.

    On page two of the estimates, you say we have a variety of small UN missions in various places, one in the Congo. Just what are we doing in the Congo? At last report, over three million people were massacred in the Congo, and nobody seems to be paying any attention.

    What are we doing there, and why are we not doing more in a situation that exists in the Congo?

    Hon. John McCallum: Maybe the admiral knows in specific terms what we're doing there, but the other part of your question was, why aren't we doing more? And these are the debates we have.

    The first question is, how much do you want to spend as a country on your military? That will then determine how many you have to send to all places combined. Once you've decided that, given your total numbers, where do you want to deploy them? I guess we've decided to focus on Afghanistan and are following our commitment to the war on terrorism to also support the security of that country. We have had our commitment for almost a decade to Bosnia, and we have our ongoing commitment in the war against terrorism in Afghanistan. Those are the major ones. Then we have smaller numbers elsewhere, including Africa.

    Now, one could certainly argue that we should refocus those commitments and have more in Africa and fewer elsewhere. Then you'll have to decide where else you'll do fewer. So I share your concern that here we have terrible things happening in parts of Africa and hardly anyone notices, partly because we're so consumed by Iraq.

    We're considering this, and you make a good point. It's really all I can say. At the moment, we are committed to these other places, and we don't have people left over. But certainly we could consider doing more in Africa and doing less elsewhere.

»  (1710)  

    VAdm Greg R. Maddison: The only specifics I would add, Mr. McGuire, is that there are eight Canadian officers who are operating in the DRC. Some of them are part of the headquarters of the UN force that is there. Others are working for the UN but are “military observers”, as we call them, who are out in the country. Basically, their responsibilities are to monitor the peace accord, which has had its fragilities over the course of the last number of months.

    In the eastern part of the DRC, when a number of folks came across the border from other countries, that caused a number of deaths. This obviously was against the peace accord that's there. However, I am pleased to say that the Canadians who are there are doing really good work, and they are in vital positions as part of that force. The United Nations recently authorized the doubling of the force that is in the DRC from about 4,000 or 4,500 to over 8,000. Many of those are coming from South Africa and other nations.

    So there is a growing level of peacekeeping force here. Hopefully this will mitigate some of the challenges that are currently there.

    The Chair: Thank you, Admiral.

    Thank you very much, Mr. McGuire.

    Mr. Benoit, five minutes.

    Mr. Leon Benoit: Thank you, Mr. Chair.

    I want to follow up on my questioning from the first round. I have some very serious concerns about our military personnel serving in Iraq.

    My first concern is that the government has not recognized that they're there serving our country, putting their lives on the line, to help remove the regime of Saddam Hussein, and therefore to make our country more secure, and at the same time liberate the people of Iraq. That lack of recognition concerns me.

    Secondly, I have a concern about their coverage in terms of pensions and insurance, that type of thing. I started the questioning on that, and the answer to my question was that in fact those military personnel are still covered from action taken in the first Gulf War. The war never ended. That's quite true. There was a ceasefire agreement in place. It hasn't ended. So officially the war is still there, and that's the reason these personnel are still covered. I believe that's what you told me.

    If this is the case, then what has this government been saying about needing a second UN resolution to somehow be involved in Iraq, and because they didn't get a second UN resolution we're not there when, as you've said, in fact the war never ended? And our military personnel are still covered because the war never ended.

    You know, if that's the case, it seems to me the government uses that when it's convenient for them in the case of providing coverage for our military personnel, and they ignore that when it's convenient, when for some reason or another they don't want Canadians to be involved in removing Saddam Hussein and his regime.

    To me, that seems completely inappropriate, and I'd like you, Mr. Minister, to explain why the government has taken that position.

    Hon. John McCallum: Well, the logic of your second point escapes me, so let me perhaps try the first.

    I have said several times in the House, many times, that the government supports 100% all the men and women of the Canadian Forces in the area, irrespective of mission. We thank them for their service and we hope very much for their safety. I have sent out this message.

    I have also suggested several times that the opposition parties in general, and the Canadian Alliance in particular, might for a moment or two put down partisan tools and send out a similar message of support to our troops without lacing that message with partisan remarks. I haven't really heard that unadulterated expression of support coming from the Canadian Alliance. But I, in my time as defence minister, have expressed my support for the men and women of the Canadian Forces many times.

    With all due respect--

»  (1715)  

    The Chair: Mr. Benoit, you're going to have an opportunity when the minister finishes answering your question.

    Hon. John McCallum: --I don't think I need lessons from the Canadian Alliance on that matter.

    As for the second issue, perhaps I wasn't totally clear in my answer. I still don't understand the question. I didn't indicate this clearly before, but the fact of the matter is, these special duty areas don't have anything really to do with war. This special duty area in Iraq was designated in 1998 by order in council for peacekeepers at the time, and it still exists today.

    The locations of these special duty areas are determined by...the benefits are determined by service in the area at the time, whether there is combat or not, and the amount of the benefit depends on the risk to the individual and the hardship of the posting.

    So the hardship of the posting and the risk to the individual are what governs the additional pay, whether this is Iraq or Afghanistan. In that sense, then, they are treated in the same way, whether or not Canada is officially or unofficially at war.

    My general point remains that I know you and I disagree on the government's overall position on Iraq, but if we put that to one side, my point is, these soldiers are in no way disadvantaged by that decision of the government.

    The Chair: I'm sorry, Mr. Benoit, your time has expired.

    For the sake of clarity on this, Minister, maybe you or Admiral Maddison could help with this.

    Our soldiers in Sierra Leone, for instance, are in a very dangerous area. We're not at war with Sierra Leone, but is that a special duty area?

    VAdm Greg R. Maddison: Not to my knowledge; it's not classified as a special duty area.

    The Chair: Are there other operations we're involved in that could be classified in that way?

    VAdm Greg R. Maddison: I think the Balkans. But perhaps it would be best if we came back with a little bit more clarity after this session just to make sure we have that one clear.

    The Chair: Thank you, Admiral.

    Thank you, Mr. Benoit.

    Mr. Grose.

    Mr. Ivan Grose: Thank you, Mr. Chairman.

    Let's get down to some nuts and bolts now. We have a fleet of 32 Hercules aircraft, marvellous aircraft. They're getting long in the tooth, but that doesn't bother me, I'm used to old airplanes. I belong to Warplane Heritage, and we fly airplanes almost as old as I am. So the age doesn't bother me.

    What does bother me, however, is that a great percentage of that fleet is not serviceable at any one time, and it's for lack of spare parts. If something breaks or doesn't pass specifications, the aircraft is taken out of service and the part has to be ordered.

    I used to run a fleet of trucks with specialized equipment on them, and I found this was false economy. You had in stock the spare parts for the most breakable parts. You had spare pumps. When a truck would come into the yard you had the pump changed and in an hour it was back on the road, and you sent the pump out for reconditioning.

    What bothers me is that I know you tend not to stock spare parts if your budget is tight, but could you assure me, please, now that the budget has fattened up a bit, that you'll try to follow this idea of having spare parts for aircraft so they can be put back in the air as soon as possible? Because if you have two-thirds of a fleet of aircraft out of service at any one time, there's something wrong somewhere.

»  (1720)  

    Hon. John McCallum: Thank you for that question. It was not the slightest bit planted--and I'm stating that up front--but it's a good question for me to answer.

    In fact, that is one of the issues in our sustainability gap problem. We were not sustainable because of people being away from home too long, because of raiding the capital budget, and also because of not having enough spare parts.

    I think there was this idea of just-in-time delivery. In industry and in a high-tech economy, just-in-time delivery is very good, but I don't think just-in-time delivery works very well in the military. Partly, though, it wasn't necessarily the thought that it did work well, but it was to save money. I mentioned earlier raiding the capital budget to pay for the groceries. To some extent, we raided the spare parts budget to pay for the groceries.

    So as a result of this infusion of $800 million a year, there's been a significant increase in the spare parts budget or the national procurement budget, which will address precisely the issue that you raise.

    The Chair: Thank you very much.

    Hon. John McCallum: That's why I say I liked the question; I have an answer. It's not that we colluded in any way.

    The Chair: Anything further, Mr. Grose?

    Mr. Ivan Grose: No, thank you.

    The Chair: Okay. Thank you.

    Monsieur Bachand.

    Mr. Claude Bachand: I will not ask a planted question.

    Some hon. members: Oh, oh!

    Mr. Claude Bachand: Thank you, Mr. Chair.

[Translation]

    I have two questions. I'd like Mr. Maddison to answer one of them, but I would appreciate a written response. My second, and more important question, is directed to you.

    I'd like to talk about submarines. As an admiral, you're familiar with the Navy. Admittedly, the price tag for new submarines is $800 million. However, these submarines were purchased to ensure our sovereignty over the Canadian Arctic and they are incapable of navigating under the polar cap, unless outfitted with an air-breathing propulsion system, the cost of which is pegged at $400 million per submarine. Therefore, we can expect to be told at some point down the road that while we have purchased new submarines, to ensure that they are effective in ensuring sovereignty over the Canadian Arctic, we now need to spend an additional $400 million. Mr. Maddison, I would appreciate a response on your part to this question.

    My question to the Minister concerns interoperability. I have often seen the benefits of interoperability, but I'm now starting to see some disadvantages. Among other things, I see the disadvantage of a partial renunciation of Canadian sovereignty. In some units, we are so integrated with the Americans that it is impossible for us to extract ourselves. You mentioned tradition and said that our historians are searching for precedents, but I know for a fact that today, it's almost impossible for you to say that we're not going to war and that we're pulling Canadians out of these combat units. The interoperability mindset is too strong.

    I have a second question for you regarding interoperability and it involves the cost to Canadians. We are more or less obligated to purchase US goods. We sign contracts with Americans when Canadians could have done the job, and I feel that not enough emphasis is placed on Canadian content when the government purchases military equipment. Since these materials are purchased with Canadian tax dollars, it would be a good thing to insist on Canadian content.

    To my mind, interoperability is a costly proposition in so far as sovereignty is concerned and also from a materials standpoint.

    VAdm Greg R. Maddison: Thank you for your question, Mr. Bachand. First of all, I'm not the Navy Commander. That would be Admiral Buck.

[English]

    From my perspective, yes, there is a plan in the capital program that has to be dealt with, with all the other pressures and priorities, in terms of looking at the capability of introducing an air independent propulsion capability for our submarines, which will allow the Canadian Forces to operate near the ice edge and be able to operate in areas in the Arctic, in our north. But that is a program that is out for some distance yet.

    As I understand it from the navy at the moment, it may be some years before that capability is seriously going to be considered in terms of introducing it, because they're planning on doing it in its major refit, which is some years out.

    The other thing I would add, and it goes back to the minister's comments earlier, is that if we were to go down the road of introducing a brand new submarine capability, we're into many billions of dollars here. So when we take a look at introducing a capability, or maintaining a capability, there are fiscal risks one has to look at as well as operational risks. And it was due to both of those, I believe, that we made the recommendation to maintain our submarine capability in terms of the deal with the United Kingdom.

»  (1725)  

[Translation]

    Hon. John McCallum: With respect to interoperability, first of all, I'm pleased to know that you're concerned about Canadian sovereignty. Your comments are on point, to some extent, because interoperability implies that we are working closely with our allies.

    It's been years, even decades, since Canada has waged a war or launched a military operation all on its own. I can't recall the last time that happened. It's important that we work with our allies, regardless of the operation. Often, we work with Americans, but that isn't always the case. In Bosnia, our troops worked alongside the British and in East Timor, we collaborated with the Australians. Everyone must work together.

    In a sense, that means less sovereignty all around, but it can also be argued that in the process, every country becomes more inter-dependant. Given that we work closely with our allies, perhaps this is something that cannot be avoided.

    As far as costs are concerned, I recall my British counterpart saying the very same thing, even though his budget is much larger that mine. He stated that there were major problems associated with interoperability because the US spends twice as much as all other NATO countries combined. Keeping pace with the US represents an enormous challenge. That's one more reason why it's important to choose the mission in which we wish to participate. We can't do everything so it's important to choose wisely and do the job right. A country can't do everything alone, unless it has a budget on the same scale as the Americans. And that will never be true of Canada or of its other allies.

    Therefore, I more or less agree with what you're saying.

[English]

    The Chair: Thank you, Minister.

    Mr. McGuire, we have time for a very quick question, and then Mr. Benoit would like to raise a point of order.

    Mr. McGuire, you have the floor.

    Mr. Joe McGuire: Thank you, Mr. Chairman.

    If our colleague from Labrador were here, he would want to ask this question, and that is, when we're making the tough choices in transforming ourselves in the structure of the military, are there any more base closures in the offing? In particular, what is the future of the base at Goose Bay?

    Hon. John McCallum: There are certainly no base closures currently being planned. We have had meetings recently about Goose Bay. There are challenges, because technologically, low-level flying is not as important as it used to be, and it is a fact that the Dutch have announced their decision to withdraw.

    What we are doing is setting out a plan to be more entrepreneurial in our marketing, to really address the concerns of the clients, so as to make Goose Bay a going concern. I'm certainly aware of the critical nature of the operation to the town and to the province. That point has been made abundantly clear to me.

    So we're working on our marketing plan to deal with these challenges that Goose Bay faces, and we're also working more closely with the province.

»  (1730)  

    The Chair: Thank you very much, Mr. McGuire.

    On behalf of all of the committee members, Minister, Ms. Bloodworth, and Admiral Maddison, I'd like to thank you for being here today, and responding on the estimates. It's good to have you in front of the committee again. We look forward to seeing you soon.

    Before going to Mr. Benoit for a point of order, I should advise committee members as well that I have an item I'd like to bring members up to date on in terms of future business.

    Mr. Leon Benoit: My point of order has to do with something that Admiral Maddison said he would clarify. But in response to my question about how our military personnel serving in Iraq are covered by insurance, the deputy minister said that they're covered as carry-over from the Gulf War, and the minister said that they're covered as a result of the 1998 commission--

    The Chair: Mr. Benoit, I'm sorry, I'm going to have to interrupt you, because I don't see any point of order in that. It may be a point of debate, but it's not a point of order.

    Mr. Leon Benoit: I'm asking just how we're going to get the clarification on that. When? Right now? At a later time...

    Ms. Margaret Bloodworth: Do you want me to clarify what I said?

    I was mistaken. I knew it went back about ten years, and I said I thought it went back to the last Gulf War. I was then informed, by someone behind me, that it was 1988.

    Mr. Leon Benoit: How...[Inaudible—Editor]...1988?

    Ms. Margaret Bloodworth: It was an order in council.

    Mr. Leon Benoit: Under what circumstances?

    The Chair: Mr. Benoit, the time for the committee has expired. Perhaps you can seek this information some other way.

    Committee members, very briefly, I wanted to inform you of an issue related to the Canada-U.S. study. Maybe what we can do is just adjourn the committee, and I can tell you informally.

    Meeting is adjourned.