PACC Committee Meeting

STANDING COMMITTEE ON PUBLIC ACCOUNTS

COMITÉ PERMANENT DES COMPTES PUBLICS

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, May 28, 1998

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[English]

The Chairman (Mr. John Williams (St. Albert, Ref.)): Good afternoon, ladies and gentlemen.

Pursuant to Standing Order 108(3)(e), we are undertaking consideration of chapter 3, National Defence, “Equipping and Modernizing the Canadian Forces”, of the April 1998 report of the Auditor General of Canada.

Today as witnesses we have from the Office of the Auditor General of Canada, Mr. David Rattray, the Assistant Auditor General; and Mr. Peter Kasurak, the principal of Audit Operations Branch. From the Department of National Defence we have Mr. Jim Judd, the Deputy Minister; General Baril, the Chief of the Defence Staff; and Mr. Pierre Lagueux, the Assistant Deputy Minister of Materiel.

We'll now turn to Mr. Rattray for his opening statement.

Mr. David Rattray (Assistant Auditor General, Office of the Auditor General of Canada): Thank you, Mr. Chairman.

We're pleased to have this opportunity to meet with the committee to discuss chapter 3 of the April report, “Equipping and Modernizing the Canadian Forces”. As you noted, I have with me today Mr. Peter Kasurak, principal responsible for this defence chapter.

We looked at the challenges facing National Defence to keep the Canadian Forces modern and combat capable. As I'm sure you will recall, the 1994 white paper on defence calls for Canada's forces to be able to fight alongside the best against the best. Of course, this doesn't suggest that our forces will have every military capability, but it is reasonable to expect that they have the components they need to maintain their core capabilities.

However, the white paper does not define the commitments the Canadian Forces will take on and we are concerned about this. We expected that National Defence priorities and plans would ensure that the Canadian Forces were equipped and ready to meet Defence policy commitments if called upon to do so, but we found that the Canadian Forces will take on a commitment today only if the tasking does not demand more than the capabilities of the equipment they have on hand.

As we note in our chapter, the deputy chief of the defence staff is reviewing the capability of the Canadian Forces to deploy the contingency forces called for in the white paper. This effort by the department to assess its capabilities is encouraging, but it looks only at the current situation.

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It is equally important to look at the long-term prospects for Canada's forces and the kind of military capability and performance Canadians should be able to expect. The department is addressing equipment deficiencies, as funding permits. However, finding the right balance between capital spending for equipment and spending on personnel, operations, and maintenance has been difficult.

Over the past few years we've seen that capital spending has diminished in order for National Defence to meet its cost requirements for personnel, operations, and maintenance. If this trend continues, capital spending could fall to an unacceptably low level, one that mirrors the situation faced by the military in the early 1970s when rust-out became a serious problem.

[Translation]

The Department has three options. It can maintain the status quo, which is eroding its ability to modernize; it can correct reductions in capital funding through increases to its reference levels and with internal efficiencies; or, with guidance, it can re-examine the long-term capabilities and structure of the Canadian Forces.

Right now the second option—to increase funding for capital equipment—is preferred by the Department. But to make sure this course of action is successful in stemming the downward trend in capital spending and that Canada is provided with a modern, well-equipped defence force, there needs to be more attention given to long-range planning and priorities and to military performance.

Parliament can play an important, key role in helping to guide defence capability and performance. Indeed, the Special Joint Committee on Canada's Defence Policy in 1994 called upon Parliament to play an increased role in defence issues. It saw the need for regular review of defence policy as well as budgetary and procurement issues.

The Special Joint Committee made several suggestions that should now be considered for implementation. Its recommendations, we believe, would provide the needed guidance and oversight that we are calling for in our chapter.

Our first recommendation supports National Defence's efforts to review its force development framework. We believe that this planning framework is key to ensuring that the Canadian Forces use their resources in the best way. The Department should be encouraged to continue this and to focus on the future, especially on the resources it will need to do its job.

The Special Joint Committee noted that Parliament could contribute to this planning process. We agree that the type of increased oversight recommended by the Committee, perhaps as part of a comprehensive annual review or an in-depth review of the Defence Estimates, would help guide Department spending.

Focusing on the future means that National Defence must broaden its current outlook. Plans are now tied to a five-year timeframe. But equipment is expected to last 30 years or more. What the Canadian Forces buy now impacts on how they will operate over the long term. Fundamental questions need to be answered: for example, which capabilities must be maintained, how much is enough and what risks should the military be prepared to face?

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[English]

Guidance on these questions comes from defence policy that states what the Canadian Forces are to do. The special joint committee called for parliamentary scrutiny on future defence policy reviews and an annual day of debate on defence policy. We believe such oversight is needed to review how well the Canadian Forces are able to implement Canada's defence policy.

Our second recommendation calls for improved reporting to Parliament. Better information on defence capital plans and priorities would help Parliament monitor defence spending and defence budgets. We note in the chapter that National Defence has had some success in developing performance measures, but there is still important work to be done. Meaningful performance indicators must be developed. We believe National Defence should show the link between what it spends and the capabilities and military performance Canadians receive.

If National Defence could improve reporting on its capabilities and performance, Parliament could better challenge the estimates. National Defence has told us that it will have meaningful performance information available within the next two years, at which time the committee may wish to monitor defence spending patterns.

Ultimately we hope the department could achieve the same success that some other countries are now realizing. These countries are doing a better job of matching their defence resources with their defence policy objectives. In other words, Parliament should be told whether the Canadian Forces can do the job they're being asked to do with the resources they have been given. Parliament should know what the department can and cannot achieve.

Other countries have taken the lead with positive results, and Canada is moving in a similar direction by implementing accrual accounting and developing performance reporting systems. These are encouraging and we believe will improve information on defence. Other countries are also reviewing defence at very high levels and in some cases have established agreements on what can be delivered. We agree with the special joint committee that similar high levels of review would be of benefit to Canada.

Mr. Chairman, National Defence is at the beginning of a phase to renew its major weapons systems, where affordable. As examples, I point to the recent decisions to buy search-and-rescue helicopters and also submarines, as you are well aware. This committee can help guide the department to ensure that its efforts make the best use of available resources and that the focus is on long-term expectations.

Mr. Chairman, this concludes my statement. We would be pleased to answer any questions.

The Chairman: Thank you, Mr. Rattray. Now we'll turn to Mr. Judd for his opening statement.

Mr. Judd, please.

Mr. Jim Judd (Deputy Minister, Department of National Defence): Thank you, Mr. Chairman.

First of all, let me thank you and the members of the committee for inviting me here today to discuss the important issue of equipping and modernizing the Canadian Forces.

Mr. Chairman, the Department of National Defence and the Canadian Forces remain committed to and capable of carrying out the defence policy assigned to them by the Government of Canada. They remain capable of fielding modern multi-purpose combat capable forces to defend Canada and Canadian values and interests while contributing to international peace and security.

[Translation]

Indeed, in my relatively brief time in the Department, I have become extremely impressed by the dedication, vigour and skill with which the members of the Department and the Forces pursue their mission.

And, of course, they have done so during a period of great transition. Because of the war on the deficit and dramatic upheavals in the post-Cold War era, the Department of National Defence and the Canadian Forces have undergone major changes.

We have instituted numerous initiatives that are aimed at streamlining the delivery of defence, to help reduce overhead costs and ensure that diminishing resources are focused on essential operational capabilities.

[English]

In implementing these measures the department's overriding objective has been to maintain multi-purpose combat capable forces at the right price. Achieving this goal is vital if we are to do the job the government and Canadians expect of us.

I should say that the Auditor General has provided some useful recommendations, which we will certainly want to take into account as we try to carry on in our continuing effort to improve the way in which we do our business.

Although the Auditor General discussed several issues in chapter 3 of his recent report—and I would add we would certainly welcome your questions on any of them—I would briefly like to address in particular the comments concerning the rust-out issue.

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Let me quote directly from the report:

In 1996, the Department stated that it `was committed to avoid repeating the experience of the early 1970s when funding restrictions led to a rust-out of major equipment.'

We remain firmly committed to that goal. We have identified equipment deficiencies that in the future could limit some of our operational capabilities. These are being addressed, but we recognize that because of finite resources acquisitions may have to be adjusted, delayed, or re-examined. This is very much an ongoing process.

Because capital procurement is a long-term activity, we cannot look at the percentage of capital spending in any one year in isolation. Procurement planning must be seen in the context of stable and predictable funding over a 10- to 15-year period, and we must continually and regularly adjust funding priorities to ensure that the forces have the tools they need to do their job.

That said, however, we must recognize that the Canadian Forces do not always need the most sophisticated or the most modern equipment to fill their mandate and to provide a meaningful, effective, and flexible response in support of the missions the government asks them to carry out.

[Translation]

Age of equipment and old technology is not necessarily synonymous with uselessness. Equipment may become inappropriate for its original role but remain useful in others. For example, our venerable CT-133 jet aircraft are no longer useful for pilot training, but they play a combat support role. And they do so at one-sixth the cost of operating a more modern CF-18 fighter in the same role.

For the type of operations likely to be undertaken in the next several years, the Canadian Forces are, in fact, in reasonably good shape.

[English]

In the vital area of command and control, projects such as the tactical command control and communications system are under way to bring us state-of-the-art systems.

The air force has a good helicopter in the Griffon and is currently looking at ways to upgrade and modernize their CF-18s, Auroras, and Hercules so they remain modern and effective. Of course, the new search-and-rescue helicopter is on its way after the government's decision to acquire that capability was made.

The army has new Coyote reconnaissance vehicles that are admired by many armed forces around the world, and new armoured personnel carriers are being bought and others are being modernized. Projects such as Clothe the Soldier are delivering a range of new personal equipment to the troops in the field.

Finally, Mr. Chairman, new frigates, coastal defence vessels, and submarines will give the navy long-lasting capabilities. As our minister recently mentioned to the parliamentary committee on national defence and veteran's affairs, we are under way now in considering the question of new maritime helicopters.

In short, in terms of equipment and modernization, the Canadian Forces are in pretty good shape, but we also recognize we will be facing constraints in the future and will be making hard choices to ensure they are given the tools they need to perform effectively into the future.

With your permission, Mr. Chairman, I would like to now hand it over to General Baril.

The Chairman: Thank you.

General Baril, I will now have your opening statement. I think this is your first appearance at this committee in your role as the Chief of the Defence Staff, so on behalf of the public accounts committee I would like to say welcome.

General J.M.G. Baril (Chief of the Defence Staff, Department of National Defence): Thank you very much.

[Translation]

Mr. Chairman, committee members, I also thank you for the invitation to discuss the subject of equipping and modernizing the Canadian Forces.

I would like to begin by putting this issue into perspective from a military point of view. A well-functioning modern armed forces requires the proper equipment, training, leadership and conditions of service or, one might say, quality of life.

These four elements are a package. Each has differing requirements at differing points in time, and, to the greatest extent possible, we balance them. However, no single element can be removed from the package without jeopardizing the combat capability of the armed forces. In short, each element must meet a minimum standard.

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[English]

The previous Minister of National Defence had concerns about the standard of leadership, so we had to report to the Prime Minister on the leadership and management of the Canadian Forces. The government is concerned about the conditions of service, and that is why your colleagues from the Standing Committee on National Defence and Veterans Affairs are studying the quality of life. The Auditor General is concerned about the standard of our equipment, and now we have his report.

At the end of the day we'll have requirements in each area—equipment, training, leadership, and condition of service—and each will be competing for scarce resources. But, as I said a couple of weeks ago to the members of SCONDVA, trade-offs are not an option. A well-functioning armed forces requires a balanced package.

To have one element below the required standard for another is not an answer. Happy people with lousy tanks or unhappy people with great helicopters do not make an effective armed force. So when we consider equipment and modernization, we cannot do so in isolation.

We also have to look at what the Canadian Forces have accomplished.

[Translation]

The Canadian Forces are doing what Canada's defence policy calls for. We are protecting Canada, co-operating with the United States in the defence of North America, and contributing to international peace and security.

The Canadian Forces have maintained their alliance commitments to NORAD and NATO. They have participated in numerous key UN deployments. And they have continued to provide assistance to Canadians through such activities as disaster relief and ongoing search and rescue operations.

I'm proud of the fact that the Canadian Forces continue to carry out each and every one of the tasks assigned to them by the Government, and we will be able to do so for the foreseeable future. To suggest otherwise is inaccurate.

[English]

Because of recent equipment programs, the Canadian Forces are more combat capable than they were at the beginning of the decade.

In the 1991 Gulf War, for example, the ships Canada contributed required fitting out with new equipment so that they would be capable of operating in the threatened environment that existed at the time. This delayed their deployment.

Contrast that to the recent crisis with Iraq, where the modern Canadian patrol frigate HMCS Toronto was deployed without delay. She was in fact deployed while at sea with NATO's Standing Naval Force Atlantic; she didn't have to return to Canada at all. She had the required capability, as did our Hercules tactical tankers that went with her.

Our CF-18 fighters are also better equipped than they were during the Gulf War. They now possess precision-guided ammunition, or smart bombs as we like to call them.

Capability is not just having the right equipment. It is using it effectively. In the Persian Gulf, where HMCS Toronto operated seamlessly with a United States navy carrier battle group and our two Hercules refuelled scores of modern fighter aircraft, we did exactly that. We also operated effectively in eastern Canada during the ice storm, and we continue to do so in Bosnia, as well as in UN missions around the world.

We do have some deficiencies in terms of equipment, and there is no denying it. These are being addressed, as are the processes by which we acquire them. But you must remember our bottom line, which is a modern, multi-purpose, combat-capable force.

We have proved time and again we meet that requirement.

[Translation]

Thank you, Mr. Chairman.

[English]

The Chairman: Thank you, General Baril.

Mr. Mayfield, eight minutes, please.

Mr. Philip Mayfield (Cariboo—Chilcotin, Ref.): Thank you, Mr. Chairman.

I'd like to thank you very much for being here with us today to review the Auditor General's report with you.

I don't think it's hyperbole to say that the Canadian people take a great deal of pride in their armed forces. These men and women represent Canada in a very unique way not only in other parts of the world but also in stressful situations within our own country.

I'd like to ask you, General, to begin with, if you could in a concise manner tell the committee what you understand the mandate of the Canadian Armed Forces to be.

Gen J.M.G. Baril: That's a rather wide and far-ranging question after the chairman said it was my first appearance.

Mr. Philip Mayfield: I won't allow you to be wide ranging. I said concise.

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Mr. Lynn Myers (Waterloo—Wellington, Lib.): Take eight minutes!

Gen J.M.G. Baril: Certainly my task here is to make sure that the Canadian defence policy, as stated in 1994, is fulfilled with the capability we have within the forces now. It is my responsibility to make sure that the assets we have within the forces, both regular and reserve, are capable of fulfilling those responsibilities within the resources that are given to us.

I must admit if there were no resource constraint, it would be a rather easy and very pleasant job, but with the resource constraint we have...and as I said in my opening statement, it's very difficult and very delicate to balance all the balls we have in the air.

Mr. Philip Mayfield: If I may interrupt you, sir, what I would like to understand is how you perceive—perhaps three or four broad aspects—the military's role in Canada and abroad, as the government and the Canadian people have provided you with that mandate. I'd like to know your understanding. What are the expectations of the armed forces?

Gen J.M.G. Baril: From the armed forces or from Canada? What is expected from us by the—

Mr. Philip Mayfield: What is your understanding of those expectations you are attempting to provide?

Gen J.M.G. Baril: I think the first is the defence of our country. The defence of our country certainly has many facets, which I don't have to go through here. Our first priority has always been from aid to civil authority to the defence of our territory within the alliance we have with our neighbours to the south, by our participation in international security through the alliances we have with people abroad, and through the operation we run with the international security and coalition within the United Nations.

Mr. Philip Mayfield: There was a white paper in 1994 that attempted to outline the department's mandate. You've mentioned that the spending reductions have made it somewhat more difficult. In relation to that, there are three general questions I'd like to ask and have you answer concisely.

1. I'd like to know how you prioritize the needs of your department.

2. What research is being done to ensure that adequate equipment is being purchased?

3. There's some disagreement between you and the Auditor General on a number of topics, one of them being risk management and other systems for analysing equipment before it's purchased.

I'd like to have you comment on those three items, if you would, please.

Gen J.M.G. Baril: Can I use the expertise of the National Defence team, please. You're asking some very precise questions in a very complex way.

The priority of equipment is certainly stated through our process, but it is also a priority within the department, of both the DM and the minister.

With respect to research and risk, I think we have an ADM who can comment on those two.

Mr. Jim Judd: Can I take a shot at the questions?

Mr. Philip Mayfield: I'd be happy, yes.

The Chairman: Mr. Judd.

Mr. Jim Judd: Prioritizing of needs, I would have to say, is very much an iterative process in the sense that on the one hand we have to balance the kind of environment in which we operate internationally by assessing either the threats or vulnerabilities that exist there....

Mr. Philip Mayfield: Would that be done in a fairly objective way depending upon professional experience, or are there systems in place to run these factors through to come out to perhaps a rational conclusion or a rational indication at the end?

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Mr. Jim Judd: If you're asking if we have a magic black box into which we fit data to get the right answer, I would have to say no. But the assessments are done on the basis of expert advice, which is partially expert military advice from the Chief of Defence Staff and his colleagues in terms of military operations, capabilities, requirements, and so on.

Another dimension to it of course is more of a policy assessment, or a broadly based political kind of assessment, as to what kind of world we're dealing with out there. Certainly, as we've seen in the last month, that can change fairly dramatically from time to time.

It's very much an ongoing, iterative process that involves the juggling of a number of internal and external factors, some of which I mentioned. Others would include what the government expects us to do and the amount of resources we have available to do that.

Mr. Philip Mayfield: I only have one minute left, so I'm going to just press you on that. You mentioned that circumstances change very quickly. One of the disturbing sentences in the Auditor General's report is that it may take a matter of months for equipment and men to be ready for a particular operation. I'm wondering how it would be acceptable in your establishment, when you're prepared to fight along with the best against the best, that you can't be ready in a shorter period of time than that?

Just before I finish, Mr. Chairman, I want to put the Auditor General's staff on notice that I'm going to be referring back to them to try to have this debate carried on a little bit farther.

But Mr. Judd, could I have you respond, please?

Mr. Jim Judd: Let me give you two quick answers.

Our whole approach to readiness is under review internally now by our folks, and we hope to have that concluded sometime in the course of this year. But more broadly, readiness is very much a function of the environment. Since the end of the Cold War, the environment in terms of threats to Canada per se has changed quite dramatically, lessening the need for an immediate, across-the-board reactive capacity. More often than not, the state of our readiness is a variable of the assessment we do of the environment out there in the world.

In specific operations where the forces have been deployed recently, the lead time to mount the operation is normally more than enough for us to meet the requirement, because in many instances—well, in all instances—the operations in which they have participated have been coalition or alliance operations, which have required a lot of consultation with the participants in terms of who's going to do what, who's going to show up when, and all that sort of thing. By and large we've been able to meet the time requirements on even those kinds of specific operations.

The Chairman: Thank you, Mr. Judd.

Monsieur Laurin, eight minutes, please.

[Translation]

Mr. René Laurin (Joliette, BQ): I am convinced that I will not have enough time to ask you all the questions I would like ask, but I will start with this one.

Mr. Deputy Minister, in your opening remarks you said: "The Air Force has a good helicopter in the Griffon, and is looking at ways... to upgrade and modernize their CF-18".

Yet the Auditor General, in his report, seems to have a different view of the Griffon. He states that the Griffon cannot satisfy the army's initial requirements for transportation and communication material. He also repeated several times that the Canadian Armed Forces' equipment no longer can fulfil initial requirements. What is your reaction? There seems to be a contradiction between the Auditor General's opinion saying that the Griffon does not fulfil the requirements for which it was bought, and your view that it is an effective tool.

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[English]

Mr. Jim Judd: I don't think there's any really significant difference between us and the Auditor General on this point, aside from the fact that we are operating from quite different perspectives as to what the helicopter was acquired to do.

I think—and Mr. Lagueux is much more au courant with that particular piece of equipment—the helicopter that was purchased was purchased to do a specific set of tasks, which in our view the helicopter does do. The Auditor General's perspective is that the helicopter does not perform a series of tasks for which we did not acquire the helicopter.

There are—and I stand to be corrected on this—generally speaking four kinds of helicopters one can use militarily for different reasons: reconnaissance, light lift, heavy lift, and attack helicopters. In the case of the Griffon helicopter, we went for a helicopter that we thought would perform the maximum number of roles we expected to require in terms of the army's operations.

But with your permission, I'd ask Mr. Lagueux if he has anything to add by way of responding to your question.

Mr. Pierre Lagueux (Assistant Deputy Minister, Materiel, Department of National Defence): Thank you, Mr. Judd.

[Translation]

Mr. Laurin, as you know, the Griffon was bought from Bell Helicopter in Montreal. It is a commercial helicopter that replaced the three models that were previously used by the Armed Forces. So it is what we call a utility role helicopter.

I would like to mention two things.

Mr. René Laurin: Don't use up my eight minutes; I do want an answer, but I also have other questions.

Mr. Pierre Lagueux: I will try, Mr. Laurin. Please forgive me. To respond to the Auditor General's comments, I would like to stress the fact that the project was not only to acquire 100 helicopters, but also a lot of other equipment, and it is not completed yet. Therefore, although the helicopters have arrived, there are still many things to be done within that project. We will be able to truly assess the helicopter when the project is completed.

Secondly, you mentioned the helicopter's lifting capability. Once again, it is important to understand exactly what the operational needs are. We established the need at between 5,000 and 10,000 pounds, 10,000 being optimal, although we now agree the 3,100 pound capacity is sufficient for the Army's operational needs at this time. We really must look at the present use of the helicopter and ask ourselves whether it satisfies present needs and is accepted by the Army and the Air Force commands.

Mr. René Laurin: Mr. Lagueux, when I read the Auditor General's comments and then listen to you, I get the impression that the Army is willing to do with less because it fears getting nothing. I'm a little bit surprised because in his opening remarks to the Standing Committee on National Defence and Veteran Affairs, a few weeks ago, General Baril said that compromises will not be accepted. When the Army needs a race car to compete and the Department gives it a touring car and the Army takes it, fearing that money will not allow for something better, I would say that there is a compromise. If that is unacceptable, I am surprised that the armed forces are accepting the unacceptable. You cannot race in a Formula I competition with a touring car. I get the impression that's what your are doing with the Griffon.

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You're telling us that you have accepted a commercial helicopter when your original need assessment showed that you needed more than that. How do you explain this attitude by the military leadership? Were you afraid to miss the opportunity, even if the budget was not adequate and you are hoping to improve them later? I'm not sure that will save us money. That is what I would like understand. The General said that compromises are unacceptable, but he did accept one. I would like to hear you on that.

[English]

The Chairman: General Baril, are you answering that question? Can I ask you to make it fairly brief? That would be appreciated.

[Translation]

Gen J.M.G. Baril: When I talked about compromise, I was talking about making a compromise between quality of life and operational performance. Now you are comparing a Formula I vehicle and a helicopter, which is only one of many elements that determine whether our forces are operational or not.

When it comes to helicopters for operations in Canada, we could have better for more money. But the best value for money in reconnaissance helicopter, taking into account their utility, their range and the money we had then, was the Griffon.

There is always a certain amount of risk involved when you make decisions on equipment acquisitions or on the forces' structures. Our jobs are risky to begin with. If we use those helicopters in NATO operations, they will not be the only ones involved. There will also be heavy transport helicopters, attack helicopters and other reconnaissance helicopters. With our very quick helicopters we will occupy a very special niche since they will be able to go where heavier helicopters will not have access and they might also use less fuel.

So this is not the same kind of compromise at all. We are talking here about the risks involved in buying equipment, as with the helicopters. We could probably have bought a much greater number of small and medium-size helicopters. That is what we had before. Now we have taken the risk of having a fleet that can do much more.

Mr. René Laurin: General, if tomorrow morning...

The Chairman: Merci, monsieur Laurin.

Mr. René Laurin: With your permission, Mr. Chairman, I would like to ask a short question. If Canada decides tomorrow morning to intervene in the crisis in Pakistan...

[English]

The Chairman: We'll come back to you later on, Monsieur Laurin.

Mr. Grose, eight minutes, please.

Mr. Ivan Grose (Oshawa, Lib.): Thank you, Mr. Chairman. As usual, I probably won't use it, so I'll pass it on to one of my colleagues here.

I would like to say something to the people here from the defence department, and especially to you, General. Incidentally, I admire you for taking on the job you've taken on. I wouldn't take it for a million dollars, and I don't think they're paying you that much.

You're among friends here. Would you please answer our questions? This committee, including my colleagues across the table, is part of the government. If we've short-changed you, tell us.

This is the committee that investigates money we have allotted and how well it was spent. From the testimony I've heard so far, especially yesterday in the briefing session, it's very difficult to answer that question, “Was the money well spent?” As you, Mr. Judd, said, the helicopter is performing within the limits we defined when we bought the thing, but were those the limits the armed forces asked for in the first place? I think not.

I know that helicopter reasonably well. It's flown by a squadron I belonged to many, many years ago. Off the record, they asked me, “What are we supposed to do with the thing?”

The Chairman: This is not off the record, Mr. Grose.

Voices: Oh, oh!

Mr. Ivan Grose: I know that, but I wanted that included in the transcript. Then I could tell you it was.

I'm wondering whether or not we are short-changing ourselves by saying to the military, “Well, this is what you think you need, but this is what we're going to give you.” At the end of the day, I think, having run my own business, a cheaper truck in the long run is a more expensive truck. I'm wondering if that's what we're doing with trying to fit the military's needs into a box we made beforehand, before they told us what their needs were.

I wish you would tell us honestly. If we are short-changing and this is in the long run going to cost us money, then for heaven's sake tell us; be honest with us. This is not a scrum. This is not the press asking you this. These are the people who are responsible, including my colleagues opposite. So please tell us if we're short-changing ourselves as well as you.

• 1615

General, your job is most difficult. I know. I watched you dance around on the last question that the equipment was doing just fine, we fit into a role in NATO, and the other people would provide the heavy lift and so on. But what should we be doing? Was this your first choice or was it a case of “we'll take the second or third choice and NATO will look after the rest”? Maybe we should be providing heavy lift and the other people the light economical helicopters. I don't know. Tell me.

Gen J.M.G. Baril: I think the situation we have is showing that the decision was that we preferred to have this capability here in Canada. If you're asking me whether we have enough resources or not, it would be much more pleasant if we would not have to be that careful with Canadian dollars. I think it's our responsibility to be extremely careful with the money we have, and before we say we need more money, we have to make sure we have squeezed every bit of capability out of the resources that are given to us. I think this is where we are at this point.

We not only have new equipment coming in that is very expensive, and maintaining the ones we have.... I think what I'm worried about most is the quality of life and the cost it will have on the quality of life.

Mr. Ivan Grose: Thank you, Mr. Chairman. I'll turn the mike over to one of my colleagues.

The Chairman: You have another four minutes left, Mr. Grose, so next on the list would be Mr. Myers.

Mr. Myers, four minutes.

Mr. Lynn Myers: Thank you, Mr. Chairman. I wanted to first of all thank the presenters for the information and for testifying here today.

General, I wanted to go to you first. In your testimony a few minutes ago you recognized there were deficiencies in terms of equipment and then you said that these problems are being addressed and the processes by which they're acquired are being addressed as well. I wondered if you could elaborate a bit more on the processes. I'm interested in that.

Gen J.M.G. Baril: I would pass it on to my experts.

Mr. Jim Judd: With respect to the process of procurement, as we indicated in our response to the Auditor General's report, we agree with some of the comments that were made in there about how we manage ourselves internally. I would have to say as well that we want to begin now, this summer, re-examining the way in which we make procurement decisions, not just in terms of how it is that we come to decide on specific items of equipment, but also how we make decisions with respect to the overall establishment of priorities within the forces as between the individual services, and also with regard to how it is that we deal with the acquisition per se.

Historically, we have done our procurements in quite a lengthy process, and it's taken many years from the time the decision was made to the time the actual acquisition of the equipment is achieved. We're trying to look at ways to shorten that timeframe. We are looking at ways to deal with the financing issues in new ways, as was done with the Upholder submarines, for example, which is an eight-year lease arrangement as opposed to an outright purchase.

So I think in sum, to answer your question, we want to re-examine internally how it is that we arrive at the relative priorities we arrive at in terms of making choices across the three services. We want to look at the process itself in terms of the amount of time it takes. We have received suggestions from Canadian industry in terms of streamlining our processes and so on, and Mr. Lagueux is involved in an inter-ministerial review, which I think is taking him away tomorrow to continue with the process of trying to tighten up the procurement process itself. Then, finally, we're looking at various alternatives to how we actually pay for them.

• 1620

I might add that, on the latter point, it's a kind of approach that a number of defence establishments internationally are looking at. The British, for example, are looking at the issue of lease arrangement for aircraft that would replace their current Hercules fleet. So there are a lot of things that I think we can learn from, whether it was in the Auditor General's report or in terms of what our allies are doing, and as the deputy minister I certainly want to be fairly comfortable that we've examined all of this.

Mr. Lynn Myers: I have a couple of questions, but I'll come back later.

The Chairman: Mr. Grewal, four minutes, please.

Mr. Gurmant Grewal (Surrey Central, Ref.): Thank you, Mr. Chairman.

While I welcome the delegation to the committee, I would also expect sharp answers because the time is very limited.

Now we are going to four minutes. Is that right?

The Chairman: That's right, four minutes.

I would just say to the witnesses, please be brief because the MPs do not have much time. I'd ask you to be specific, concise, and direct with your remarks.

Mr. Gurmant Grewal: With respect to the equipping and modernizing of the Canadian Armed Forces, I don't see that the Auditor General...or myself, after reading the report.... I am not very clear on what the priorities and the goals are.

What is the yardstick to measure the performance? In particular, could you elaborate on the point that the Auditor General found the department doesn't have a financial system in place that will allow it to report on its business lines, whether it is Canadian defence or international defence, or equipment expenditure on NATO and so on.

As a parliamentarian, when can I expect to see the performance and financial conclusions that this financial system will draw? That is one question, a broader question.

Secondly, we see that the defence budget is increasing, but on the other hand the capital funding is expected to decrease; it is going in the other direction in absolute terms. It is quoted that your department stated that hard choices will be made and actions are being taken. I would like to find out what you mean by “hard choices”. Will you be risking your main mandate by those hard choices?

Mr. Jim Judd: On your question with respect to financial systems, we are introducing a new financial system in the department.

Mr. Gurmant Grewal: What is the timeframe?

Mr. Jim Judd: The system will be in place in the year 2001. As part and parcel of that process, including our business process re-engineering, we hope to be able to address the Auditor General's comments.

On the budget funding issue, generally, with respect to the issue of hard choices, we are and have been doing a variety of things in that area. One has to do with doing business differently. For example, there is the cooperation with the private sector in Moose Jaw with respect to our fighter training program, which essentially is being privatized.

Secondly, we're doing—

Mr. Gurmant Grewal: Will it be contracting out or privatizing?

Mr. Jim Judd: Contracting out.

Mr. Gurmant Grewal: Okay.

Mr. Jim Judd: All of the areas of the department and the forces are being looked at constantly with respect to finding the greatest possible efficiencies, without at the same time putting us in the position of jeopardizing the security of the Canadian Forces unduly in terms of their operations.

Among those sorts of things are alternative service delivery, looking at how we can do non-core business differently, either by contracting it out or privatizing it, cutting back on the secondary or subsidiary services where it won't affect the sharp end of the stick, if I can use that expression.

Mr. Gurmant Grewal: Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Grewal.

Mr. Laurin, I understand you would like to have some more questions.

• 1625

[Translation]

Mr. René Laurin: Yes, but I will change my strategy because there are so many things I want to find out.

General Baril, can you tell us if what the government expects from its armed forces is sufficiently clear for you to be able to say to the department: Given the role that is expected of us these are the tools and the equipment that we need and here is the procurement plan for the next 5, 10 or 15 years? Is the mandate the government has given you sufficiently clear for you to establish budgets that will allow you to properly equip the armed forces in the 5 or 10 years?

Gen J.M.G. Baril: Yes. But it would be too easy if we could say exactly where we will be in 1, 5 or 15 years. As we said earlier, the environment changes and so we must continually make adjustments in our procurement program. Changes in risks and threats everywhere in the world force us to make adjustments.

But I can answer yes to your question. In fact I can tell the government any day, when I receive any request, whether I can respond or not because I have or have not the necessary equipment.

Mr. René Laurin: Have you also developed and presented to the department a plan so that the government knows what equipment you need? If so, could we maybe see it?

Gen J.M.G. Baril: I would like to ask where the long term procurement plans are. Some are probably classified, but they can be declassified for the government. We do know what our short and long term procurement plan is.

Mr. René Laurin: For example, we are now buying used submarines. That is probably not what you had originally asked for.

Gen J.M.G. Baril: In our 1967 plans, or rather 1987 plans, we would have nuclear submarines.

Mr. René Laurin: Don't go too far back; I wasn't born then.

Gen J.M.G. Baril: In 1987? These submarines are appropriate for our navy's needs and for the defence of the country.

Mr. René Laurin: Do you plan your procurement based on assessed risks or past experience?

Gen J.M.G. Baril: My colleague can probably answer you.

The Chairman: Mr. Deputy Minister.

[English]

Mr. Jim Judd: The short answer is it's a combination of both—experience and projections into the future. As I said earlier, we have to take account of what we're facing internationally, what the potential requirements might be there, and try to develop on the basis of that kind of—

[Translation]

Mr. René Laurin: Forgive me for interrupting you, Mr. Deputy Minister. The Department plans to spend 6.5 billion dollars over the next five years. How did you arrived at that amount?

[English]

Mr. Jim Judd: That was the Auditor General's conclusion, I think, with respect to our budget. I would very much hesitate to make any guesses about future budgets in terms of what the government may or may not decide to do.

The Chairman: Mr. Rattray or Mr. Kasurak, do you want to respond to that?

Mr. Peter Kasurak (Principal, Audit Operations Branch, Office of the Auditor General of Canada): Yes, Mr. Chairman. I'd just like to reiterate to the committee that the numbers we have in our report are based on the department's business plans, and they have been approved up to a fairly high level in the department. So it's not an estimate coming from the office; it's a compilation of the department's own estimate and a reporting of it. I'd just like to clarify that while this isn't in the department's long-term equipment plan, which is only based on the budget they actually have, it is a fairly senior estimate of their needs.

The Chairman: Thank you, Mr. Kasurak.

Dr. Pagtakhan, four minutes.

Mr. Rey D. Pagtakhan (Winnipeg North—St. Paul, Lib.): Thank you, Mr. Chair, and thank you all for your appearances.

The Office of the Auditor General identified in its presentation three major recommendations as I understood them. So my question to the officials from the Auditor General's office is this. So far, from what you have heard, have those three major concerns you have identified—the need for a development framework, improved reporting to Parliament, and matching defence resources with defence policy objectives—been addressed adequately this afternoon by the departmental officials?

• 1630

Mr. Peter Kasurak: From my understanding of what the department has presented, we're quite happy to hear that the deputy said they are working very hard on improving the framework and they are improving it in many of the key areas we identified. I didn't hear conflict scenarios mentioned, but it's my belief the department is also working on those. So I think the department has told the committee about that portion of the items we've recommended on. I haven't heard the department speak to the other two items yet.

Mr. Rey Pagtakhan: With that clarification then, would the officials and General Baril tell us their response to those recommendations from the Auditor General's office—specifically, improved reporting to Parliament, the need for meaningful performance indicators, and the matching of defence resources with defence policy objectives? What are the best ways we could do these, what is the plan, and when are you prepared to share it with the committee?

Mr. Jim Judd: On reporting to Parliament, specifically on performance measurement indicators that would be useful to Parliament, I think my predecessor made a commitment that they would be produced within two years, which would put us into 1999.

Secondly, with regard to matching objectives and policy, that is very much at the heart of a new business planning process we are embarking upon, as are most other departments in the government this year. Frankly, it's going to be quite difficult for us to do. It's not going to be easy. We will want to work very closely, I think, with people in the Treasury Board, and we'll probably also want to talk to some of our allies and other friends who are, according to the Auditor General, farther ahead than us in doing that kind of thing, such as New Zealand and the United States.

We will be starting on that this year. We hope to improve continually. I hope when we appear here next year we will be able to report progress on both those fronts.

Mr. Rey Pagtakhan: To the witnesses from the Auditor General's office, is the commitment to finish the performance indicators in two years—1999—a satisfactory timetable, from your perspective?

Mr. Peter Kasurak: This is a particular issue the office has brought forward almost every other year since 1984. Viewed from that perspective, I'm disappointed we haven't achieved it yet. Viewed from the perspective of the witnesses here today, given the baseline they have, there may be some scope to hurry it up, but it's probably a realistic estimate that 1999 cannot be substantially improved on.

I might add, however, that one of the things that putting this chapter together seemed to teach us is that better information to Parliament needn't be totally dependent on a global information system. We would certainly encourage the department and this committee to consider other ways, as well as waiting for the full information system to arrive. There can be improvement in between.

That would be my response, Mr. Chairman.

The Chairman: Thank you, Dr. Pagtakhan. We'll come back to you.

• 1635

General Baril, the Auditor General's report has been fairly critical of the equipping and modernizing of the Canadian Armed Forces. However, when I listened to the deputy minister's opening statements, it seemed to be a “feel good, be happy” type of report. You have the responsibility for leading the armed forces in our peacekeeping roles and potentially, but hopefully never, into battle. As the Chief of Defence Staff, how do you feel about leading the armed forces with the equipment and modernization we currently have?

Gen J.M.G. Baril: Mr. Chairman, as I mentioned in the opening statement, the armed forces of today are better equipped, better trained, and probably better led than they were at the beginning of this. There's no doubt in my mind the navy has the most modern equipment. The air force needs upgrading, but it's still in better condition than it was seven or eight years ago.

The Chairman: But are you confident that you can lead your men and women?

Gen J.M.G. Baril: I certainly am, but within the limitations the forces of 1998 have, like they had 10, 15, 20 or 30 years ago. Whatever limitations the forces have, I know about it and I will advise the Prime Minister and the leadership of our country.

The Chairman: In your opening remarks you said there are four elements to the package: equipment, training, leadership, and conditions of service. You said that at the end of the day we'll have requirements in each of these areas, which strongly suggests that you don't have them at this point in time. Are you comfortable with the positions that we have today on equipment, training, leadership, and conditions of service?

Gen J.M.G. Baril: It is certainly at a level that is acceptable. We always have a need for better equipment. Technology is changing so fast, and that's why we have such an expensive equipment acquisition plan. But for what we're being asked to do now under the defence policy, and knowing that we're going to do it within a coalition if we go into a full war, yes, I feel very much at ease.

The Chairman: Mr. Judd, in your opening remarks you mentioned that given the “type of operations likely to be undertaken in the next several years, the Canadian Forces are in fact in reasonably good shape.” Two weeks ago the Indians exploded numerous nuclear devices, and this morning Pakistan did the same thing. So the world can change very fast.

On what basis do you say we are in good shape to undertake what can happen in the next few years?

Mr. Jim Judd: Mr. Chairman, I said that because in terms of our current assessment, irrespective of developments this month on the Indian subcontinent, our sense of the overall international environment is much different from what it was 10 years ago—

The Chairman: But is it different from what it was three weeks ago too?

Mr. Jim Judd: I think we and most of our friends and allies among the industrialized countries are still thinking very hard about what has happened in the Indian subcontinent this month. Trying to figure out for us what it might mean in broader political and military terms is a process that we haven't yet finished. In terms of operations, I guess I was referring to operations in the sense of the kinds of operations the forces have been involved with and are involved in now and for the foreseeable future.

The Chairman: We never want to think we're going to refight the last war all over again. Sometimes it's a new tack. When I take a look at the Auditor General's report, paragraph 3.16 says that since 1984, the Auditor General has been reporting its concerns regarding equipment modernization,” and then it gives examples. In paragraph 3.17 he found weaknesses in the department in 1984 regarding linking policy to the equipment needed to fulfil policy. He had concerns in 1992, which he pointed out in paragraph 3.18, and 3.20:

...in 1996...some equipment for the army, particularly for peacekeeping was deficient for the missions and tasks being undertaken.

Since 1984, a period of 14 years, the Auditor General has been critical in a number of reports about the armed forces' capacity to meet its potential obligations. What assurance do we have that things will change now?

• 1640

Mr. Jim Judd: General Baril may want to comment on this as well, because he is the overall military commander, but I'm not sure that I would agree that we've put our forces into positions in operations—

The Chairman: I just said that the Auditor General has been critical in numerous reports, and in this one we have before us he is again critical. My question is, when can we look forward to the point where the Auditor General says he's looked at it and feels that significant progress has been made to ensure that we are in a state of readiness that it is decided is state of readiness we want to be in?

Can we look forward to a change in attitude by the Department of National Defence to ensure that we are up to par?

Mr. Jim Judd: I don't know whether I will ever live long enough to see an Auditor General's report about anybody that says things are all right. I hope to live that long.

Realistically, though, I think, to answer your question, the general and I are in an organization that, as I said in my opening comments, has been through quite a transformation.

The Chairman: What we're trying to do here is.... The Auditor General is bringing to our notice—and as Mr. Grose pointed out, we would hope to think that you're amongst friends here.

When I take a look at paragraph 3.32, it says:

In the 1994 Land Force Development Guide,

—presumably that's your own publication—

the army stated that operationally it had not kept pace with technology to modernize its equipment, leaving it vulnerable to threats in low-level and mid-level operations.

This is your own internal assessment that the Auditor General is bringing to our attention, saying that you are now vulnerable to low-level and mid-level operations.

Its infantry and armour could be detected, engaged and defeated long before it was known that an enemy was present.

General Baril, how do you feel about these comments coming from your own department?

Gen J.M.G. Baril: Well, those are certainly some of the shortcomings we had in the past, and we're probably going to have some in the future, but most of them and many of them have been addressed by upgrading the equipment we have. Old equipment doesn't mean its useless equipment. Old equipment can be upgraded and be very capable, and that's what we have in the mission right now.

The Chairman: You keep saying we will upgrade. Since 1984 the Auditor General has always said you're always behind the eight ball; you're always trying to play catch-up and you're still trying to play catch-up. Now you're saying we will get there one day. Will we ever get there, where you feel confident?

Gen J.M.G. Baril: I feel confident now. Where we are committing our men and women, I feel confident that they are well protected and that they can fulfil the mission.

The Chairman: Mr. Rattray, do you want to say something?

Mr. David Rattray: Being one of the people who's been around since 1984 and responsible for the audit of National Defence, and in fact going back to 1982, I guess we're at a point, in my view, where we've put forward a number of initiatives that are again started by the department. They deal with planning scenarios, planning guidance. They deal with restructured doctrine, with new performance information for Parliament, better performance indicators, new financial information systems, and so on.

I guess we're at a point where we'd like to see more of the implementation plans, dates, deliverables, and so on. There is a major effort that has gone on to restructure the procurement process, which I'm sure we'll get into in the next chapter and have dealt with in the past. It has done an incredible amount in terms of streamlining the supplies—the lower-end items.

The department is about to embark upon a major reformatting or revamping of its major capital acquisition process, but it's at the implementation-planning stage. So we're really trying, I guess ourselves, to get some hard dates, times, and commitments, and see actual progress in many areas. It's a frustration on our part, too, after 15 years.

The Chairman: Thank you, Mr. Rattray.

Mr. Mayfield.

Mr. Philip Mayfield: Thank you very much, Mr. Chairman.

I left off by saying that I'd like the Auditor General's staff, Mr. Rattray and Mr. Kasurak, to comment on the conversation we were having concerning changing world conditions and the ability of the military to decide which equipment they need for that. I was wondering if you'd like to make a comment on that, beyond what you've already made, inasmuch as I left by saying I was going to do that.

• 1645

Mr. Peter Kasurak: From our perspective, one of the key elements that needs to be added to this mix is the definition and publication of conflict scenarios. We all realize that we live in a very uncertain world where we are not going to predict very easily the next conflict that might involve our country.

The way the various armed forces have attempted to deal with this—and indeed I think the Canadian Forces have now begun on their own—is to develop a set of conflict scenarios that are a set of probable things, likely contingencies that would have to be prepared for, and present them to their legislature or their government and say, “This is what we're prepared to do, and this is how our present force structure and equipment fits against that. We may be over in some of these and we may be under in some, and here's the plan to make up the difference.”

Without that baseline, and a baseline that is available to Parliament, it will be very difficult for us to really come to grips with this particular question. So I guess we would continue to urge the department to press forward in its efforts to put these together.

Mr. Philip Mayfield: In light of what we have been talking about, General Baril and Mr. Judd, and in light of what has just been said here, I'd like to ask you, do you really know what types of operations are likely to be undertaken by your personnel over the next several years? Do you have memorandums of understanding with our allies about capabilities to mobilize quickly or at a certain rate of speed?

If you don't, how do you know what kind of equipment to buy? And is it true that your scenarios are not yet fully developed? If this is so, again, on what basis do you decide what kind of equipment to buy and how you will assess the equipment you're going to be looking at? Could you respond to that concisely, please?

Mr. Jim Judd: On the scenarios issue, sir, we are part of the way down the field, but not at the goal line. We hope to have those finalized in the course of this year, because they matter quite a lot to us in terms of how we are planning for the future, including, for example, how we deal with the Y2K problem with our computer systems.

With respect to definition of commitments, yes, we do have defined commitments. We have defined commitments in the white paper. We have defined commitments in NATO in terms of the provision of naval, air, and sea forces, and personnel in certain circumstances. We also have defined commitments with the United States with respect to the North American Air Defence system, which set out not just the number and quality of aircraft that we provide for the defence system, but also the network of detection systems and so on.

Over and above that, for operations that are not the subject of pre-existing commitments, it tends to be very much a kind of collective negotiation amongst participants in an operation as to who will provide what and under what circumstances, be it with the NATO operations currently under way in the former Yugoslavia, or the most recent UN operation that we participated in, in the Central African Republic. We are part of a multinational force providing about 45 personnel who are sort of the key communications group for the whole operation, an operation that in and of itself is much bigger than that.

The Chairman: Thank you, Mr. Judd.

Mr. Myers, four minutes.

Mr. Lynn Myers: Thank you, Mr. Chairman.

My good friend and colleague Mr. Grose wanted to go off the record. I very much want to stay on the record for what I'm going to say.

I'll listen to the Auditor General and I'll listen to General Baril in terms of what's being said, but I have to say to you that as Chief of the Defence Staff, General, when you state that the military is in fact in reasonably good shape and that you have confidence in it in terms of what it can do and its capabilities, knowing that there are in fact shortcomings and improvements to be made, I will listen to you more. So I appreciate that level of confidence you gave us today.

• 1650

I wanted, Mr. Judd, to go back to procurement planning and long-range capital planning. You stated in your testimony that the funding priorities and such are adjusted periodically, and I wonder if you could give us an indication as to when that's done. Is that on a yearly basis? How is that done?

Mr. Jim Judd: I don't have a lot of experience in this department; I only arrived less than three months ago. With respect to the procurement process, there was under way already a review, which Mr. Lagueux is very much central to, on the overall reform of the process itself within the government. When I came in, my own sense of the process at large was that I really wanted to try to get at a more encompassing priority-setting exercise that cut across all the services, dealt with all the equipment issues, and was able to balance off requirements and tradeoffs within them. As I envisage it, because we haven't gotten too far down the road on this process, it would be an annual exercise that we would revisit.

One of the big problems we potentially face in this was the subject of a series of articles over the last several days on what is called the revolution in military affairs—the application of information technology precision guidance systems, which are producing a whole different generation of military or potential military equipment. This is very similar to circumstances many people face in civilian society, in the sense that every three to six months you have a new computer and a new computer program to try to deal with.

For us, that whole revolution in military affairs, with information technology guidance systems and all of that sort of stuff, is going to probably make our lives a lot more difficult in dealing with military procurement issues. That's why I think we're going to have to revisit it every year, at least.

Mr. Lynn Myers: I wanted to go back to something the general said. I was very sensitive to what he said about there being a balance between equipment, training, leadership, and quality of life.

How do you assess those things and how do you rate them in terms of what's more important, or is that a judgment made at the time? Is it planned through; is it given its due consideration? I guess what I'm really trying to get a sense of is how that in fact is planned for or how you make those kinds of decisions when it comes to quantifying, e.g., money and resources.

Mr. Jim Judd: As I said earlier, sir, there's unfortunately no black box available to us to provide magic answers. It's a question of our best judgment of requirements of circumstances and our best assessment of what the traffic will bear in terms of the budget.

As far as leadership is concerned, I might point out that in the civilian and military leadership of the department and the Canadian Forces, I think I'm right in saying that about 75% of it is brand-new within the last 10 to 12 months, from the minister on down. The chief came in last fall along with the three service commanders, the deputy chief and the vice-chief. I'm new. The Judge Advocate General is new. The civilian lawyer is new. So there's a lot of “getting to know you” going on at our place, but on the leadership side we're doing very well.

On quality of life, your companion parliamentary committee, SCONDVA, is engaged in a very intensive process of looking at that issue and will be reporting on it in the fall. In fact I think today they're holding hearings here in Ottawa. They have been across the country and internationally looking at the forces and will come up with a very comprehensive report, which will probably touch on quality of life and many other things.

• 1655

At the end of the day, the short answer is it's a question of best judgment and best assessments by the military bureaucracy and personnel and our political masters.

The Chairman: Thank you, Mr. Myers.

Dr. Pagtakhan again, four minutes.

Mr. Rey Pagtakhan: Thank you, Mr. Chair.

When you mentioned that a number of new changes have happened in the department, I was reminded of that sociological principle that leadership is a function of time. In other words, we have responded to the needs of the time. The confidence you have expressed indeed indicates that very truism.

General Baril, of the three mandates—defence of Canada, defence of North America, and international peace and security—how would you quantify that confidence? Are we A, A-plus, B, C, D, or F, F being a failure?

Gen J.M.G. Baril: If you ask me for a personal assessment, I always will give the highest, but we always have to be careful. We don't know what will be the threat to our country in a year or five or ten years. We have a pretty good clue what it is.

In the time of the good old enemy of the Cold War, we knew exactly who he was, where he was, and what he had. Our purpose at that time was to counter him the best we could within the resources we had. Now the threat we have is very difficult to define, especially in the future, because it's changing too much. What is going to be the threat to our country in five years? Where will it come from?

From what we can perceive now as the threat to our country, and with the improvement we have within our force and within our capability, in combination with the allies, the coalition, and the treaties we work with, we're fairly safe. But the events of the last three weeks are very disturbing of course.

Mr. Rey Pagtakhan: Mr. Deputy Minister, after submission of your budget, if by circumstance an extra $ 1 billion were offered to you by government, would you decline it?

The Chairman: Was that a raise?

Voices: Oh, oh!

Mr. Jim Judd: I think I might be put in the position of having to succumb to the entreaties of my colleagues and accept it.

Mr. Rey Pagtakhan: I guess I was trying to say that the budget proposal is a very realistic proposal, and of course that the care with which you'd like to spend Canadian dollars, as the general had indicated earlier, is always there.

My question to the Auditor General's office is this. In light of what the chair said about the concerns since 1984, of course the impression is left that the concerns have not been addressed. But I would like to suggest that if none of the concerns have materialized as damage, they have remained only conceptual concerns. Have you identified that any of these concerns have indeed materialized as damage?

Mr. Peter Kasurak: I'm sorry; I don't fully understand the question.

Mr. Rey Pagtakhan: Perhaps I can use the model of medicine. If we do not take this step, we will have another epidemic. Then over a decade, if no epidemic has happened, no damage has happened. So I would like to know in that context.

Mr. Peter Kasurak: Well, in a military context, one doesn't really know how ready one is until the event arrives, unless one is testing all the time. Although we haven't conducted any recent audit on this, in 1996 we tabled a peacekeeping audit, and what we found there was that not only wasn't the department adequately carrying out its testing program of exercising and assessing the readiness of the Canadian Forces, but in the largest exercise they planned, which was Op COBRA, they had fallen short of meeting their readiness goals by quite a significant amount.

So on that basis, I would say there's evidence of shortfalls, but perhaps more important, we've reported to Parliament weaknesses in our ability to assess ourselves on an ongoing basis.

• 1700

Departmental officials may turn around in two seconds and say that since 1996 all this has been remediated. At that point in time we felt these were significant shortcomings causing us some concern. Based on our own work, that's the best answer I can provide to the committee.

The Chairman: Thank you. We'll come back to that.

Mr. Rey Pagtakhan: Mr. Chair, I think it's very important to do that.

Mr. Lynn Myers: It's very important that we hear the other side of this.

The Chairman: Okay.

Mr. Rey Pagtakhan: How do Mr. Judd and the general respond to the observations by the Auditor General, as indicated?

Gen J.M.G. Baril: Your question is rather interesting. Were there consequences of what was being reported? Were some men and women in Canadian uniform killed because of the inadequacy of the equipment they had? My answer is I would have to go through our board of inquiry. We did lose a lot of men and women, and many of them were hurt. A lot of our vehicles were hit by just about everything that was being fired. I don't think we had anybody who was killed because of the inadequacy of our equipment.

I don't think any part of the task that was given to the Government of Canada, to the forces, and to the unit we had deployed and we now have deployed.... I don't think it was because they were poorly trained or because that was not met. We had some shortfalls and we learned some great lessons.

I think it's because we did not train properly before the conflict and we were caught; we were not ready for that type of conflict. We were still expecting the Russians and something else hit us. We were not ready for it.

I do hope we're not going to train for the conflict that happened three years ago but that we're going to train for the conflict up front. That's why we're looking at improving the equipment, the leadership, and the quality of life of everyone we have.

The Chairman: Thank you.

Mr. Grose, you have four minutes.

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

I'd like to make it clear at the start that I'm not trying to upstage your defence committee. From our point of view, I'm looking at what we are getting for our money and whether we are getting our money's worth.

I will direct my questions to the general. Could you deploy a brigade group with the deployment capability, the supply capability, and the close air support capability...could you deploy this almost immediately? If it were far away from Canada it would be a matter of days; I realize you're not going to be able to get them there tomorrow.

Secondly, if you could not deploy this, just what could you deploy immediately, keeping in mind that I'm asking what it is we have given you the ability to do?

Gen J.M.G. Baril: To answer your question on whether I can deploy a full brigade group tomorrow, the answer is no. I don't have the task to do that in our defence of Canada. I've been given 90 days to put such a group out. Whether or not I could have it out in high intensity or middle intensity in 90 days, my answer is yes.

We did prepare the brigade to go on the COBRA exercise. It had some shortcomings that were repaired. Last week in Sofia we had a complete mechanized brigade out in the field in every phase of war, including live firing.

So if you ask me if they have a brigade ready to go, my answer is yes. That brigade would have the limitation in combat capability that we have identified. It doesn't have multiple rocket launchers, it doesn't have attack helicopters, and it doesn't have the latest tank on the market right now. We have told our allies we have the capability to do it in 90 days. If it would take me 95 days to prepare it, I would tell the authorities in Canada to give me 5 more days.

The second question is, what can we deploy in 48 hours, in 7 days? It's a somewhat classified, well-known menu of capability that we have agreed upon within our country that I can provide to this country, to the allies, and to the United Nations. We can let you know about this very precisely.

Mr. Ivan Grose: I don't want to know anything I shouldn't know. What I want to know is, in that immediate circumstance, have we prepared the niche we would operate within with our allies?

There's another question I should have added to the first one. Would our equipment be equivalent to that of our allies beside us or that of our enemy in front of us?

• 1705

Gen J.M.G. Baril: From a navy point of view, our ships have demonstrated that they are top-notch and they can operate with all the coalition.... Our airplanes are the same. They came back from Bosnia just before Christmas last year, and they can operate with the best and against the best.

Mr. Ivan Grose: In both air support and ground support...?

Gen J.M.G. Baril: They can do both, yes. They have the weapons on board. The pilots are multi-trained. They have smart bombs that they can fire at close range, they can go in with rockets or canons, or they can add defence with the other airplanes.

Mr. Ivan Grose: They didn't have that capability during the Gulf War, did they?

Gen J.M.G. Baril: Yes, they did, but it was not as good as it is now. They didn't have the smart bomb at that time. Now we have the capability. Not only that, but we have other gadgets on board that can see through the night.

In the army we have upgraded our reconnaissance capability. We probably have the best reconnaissance vehicle there is right now, the Coyote. A new APC is coming on line now. Every vehicle we have in operation has been upgraded with add-on armour. I've seen the results of direct hits on those vehicles and they will survive.

Communication is coming on board also, so, yes, we have quite a bit of capability. The pieces we don't have would be shared by the other members of the coalition, just as it was during the Gulf War and as it is right now in Bosnia.

Canada doesn't have any helicopters. They're provided by other members of the SFOR, while we're providing some capability from medical to logistic.

Mr. Ivan Grose: If you wonder at my skepticism, I come from a town where the reserve regiment was equipped with Cougars, which they took to Bosnia, and of course they were inadequate. They were inadequate in Oshawa, but that situation no longer prevails.

Gen J.M.G. Baril: May I give my opinion on the Cougar?

I just came back from Bosnia about 10 days ago. The Cougar is rather odd. It's a 20-year-old vehicle, but it's still quite capable. It has a powerful gun on it, and in the kind of missions we have it is good. It has been up-armoured, but it's not the best vehicle and it will be replaced.

I hope to have the Coyote in by the next rotation, not by this summer but by the next one. Our friends from the cavalry just can't wait to use that weapon. You would be amazed at the capability it brings in mobility, fire power, and especially observation. It has probably the best electronic suite there is in any reconnaissance vehicle rolling now.

Mr. Ivan Grose: Thank you, General. You've answered my questions very well.

The Chairman: I think Mr. Kasurak wants to say something on this issue.

Mr. Peter Kasurak: I would like to remind the committee of previous statements that departmental officials made to us in the course of the audit.

Not to contradict anything that departmental witnesses have said, I just want to remind the committee that in our report, when we talked about specific weapon systems that were being acquired, very often there is a comment that the officials told us that this equipment was not really intended to be used in mid-intensity conflict. It would be suitable for low-end or the low-end of a mid-intensity conflict, which is a rather undefined area.

Thank you.

The Chairman: There's no question whatsoever that our armed forces are a formidable force, and we as Canadians appreciate that.

When I look at paragraph 3.36, regarding the air force, the quote from the Auditor General is that:

The air force faces “a serious risk of obsolescence and capability degradation in a number of key areas”, as it reported in the National Defence 1997-98 Estimates.

Again, the Auditor General comes back to the Department of National Defence's own publications.

It goes on to say “Defence policy calls on the air force for seven key capabilities”, which it outlines.

In paragraph 3.37 it says that “The air force currently believes it is not fully capable in all its core areas...”. General Baril, I'd like to have your comments on the capability of the air force to meet what you believe to be its mission, because obviously it seems to be falling short.

Gen J.M.G. Baril: I have the greatest confidence in the air force as it is today. They stated in the report that those airplanes were the top of the line when we bought them in the early 1980s, both the F-18s and the Aurora, with all their capability. It's electronic, it's high-tech, and it's being rotated by our allies very quickly.

• 1710

I told some of the folks I was talking to in the air force that we have to upgrade the CF-18, because what they have inside is a Commodore 64. We must put in something that is more powerful, and, actually, it's not very far from the truth. The ultimate high-tech of 1985-86 is degrading quite rapidly and I'm worried about the CF-18 and the Aurora. We have to upgrade them to make sure they can still fight with our allies—I don't think we're going to go on our own—and can integrate with the fighting capability of the other air forces of the world.

The Chairman: When you say you're worried about the CF-18 and the Aurora, how soon should we replace these? I take it you would like—

Gen J.M.G. Baril: We're not even thinking of replacing the airframes. We're thinking of replacing all the systems inside, from the navigation system to radar to the weapons control system we have.

The Chairman: When should that be done?

Gen J.M.G. Baril: I'd like to have it done tomorrow, but I think we have an air force that is still quite capable with gradual upgrading. They can hold their own for probably the next five years. As we move along, some of the systems will have to be upgraded.

The Chairman: Will you have it all done in five years?

Gen J.M.G. Baril: I don't know. I'm not the expert on—

The Chairman: It depends on the budget.

Gen J.M.G. Baril: It's always linked to money. And if we were to buy everything that is available today, we would probably have to upgrade them again in five years.

The Chairman: Changing to helicopters, the Auditor General said in paragraph 3.35:

The Griffon utility helicopter recently acquired for the air force is able to provide troop transport and conduct limited reconnaissance operations. It is capable of lifting the army's lightweight artillery only very short distances.

I read that as a critical comment by the Auditor General, but, Mr. Judd, in your opening remarks you said the air force has a good helicopter in the Griffon. There seems to be a conflict in your perception of this particular aircraft. So I'd like a quick word from Mr. Judd and a quick word from Mr. Kasurak to explain the apparent contradiction.

Mr. Jim Judd: The Griffon helicopter was brought into service with our forces to replace three different helicopters used for three different types of purpose. The decision to acquire the Griffon, I think, was judged to have made sense in terms of its overall utility for a variety of different roles. It also made sense in regard to the previous situation in that with a single type of vehicle, as opposed to three types of vehicles, you get savings in O and M costs over time, training costs, all those kinds of operational factors.

I think the general spoke earlier today about the helicopter's capabilities, and Mr. Lagueux did as well. I guess our view is that, on balance, the helicopter does enough different things for us to have made it a worthwhile acquisition.

The Chairman: So we'll ask Mr. Kasurak, because it would appear that these are critical comments in the Auditor General's report.

Mr. Peter Kasurak: Yes. Our concern, when we looked back not only on the original requirement but on the studies the department did to look at the suitability of this aircraft after they'd purchased it, was that it did not meet the task list that had been set out.

We've mentioned what the shortcomings are in this chapter and in chapter 4. In terms of the ability to lift the gun, it's quite correct to say that the aircraft meets the contracted specification to lift 3,100 pounds. Unfortunately, the gun ended up being a few hundred pounds heavier than that. As a consequence, the gun can now only be transported 25 kilometres without refuelling. When you look back at the original military requirement, it was stated that 200 kilometres would be a reasonable distance for this sort of capability.

That's the sort of concern we have. It's not that contract specifications haven't been met. It's not that given that you only have to buy one thing, this might not have been the thing that covered the widest possible number of items, but that critical items, critical capabilities, were being left behind, and that while certain capabilities are easily provided by foreign forces, this is not always true. Close air support tends to be an organic part of mechanized armed forces and takes a lot of training. So there is a shortfall. Also, some of the remedial equipment or upgrades, if you like, add-ons, to make these aircraft have real military capability.

• 1715

At the time of our audit we were informed that not all of these projects had been approved or funded, so there was some doubt about exactly when they would arrive. So, taken overall, we have concerns about the overall strategy behind purchasing equipment that is toward the low end, that sits right on the very margins of capability to do certain tasks.

The Chairman: Thank you.

Mr. Philip Mayfield, please.

Mr. Philip Mayfield: Thank you, Mr. Chairman. I'd like to direct your attention to the Auditor General's report, paragraph 3.76, where it says:

Setting overall departmental priorities is the responsibility of the Defence Management Committee. We found no evidence to indicate what criteria the Department uses, other than statements in the White Paper that the Department is to emphasize equipment life extension and maintenance of “core capabilities”. According to the Vice Chief of the Defence Staff, the process is adversarial and concludes with senior direction that balances requirements and affordability.

I'd like to ask, what does “adversarial” mean? When I think of my colleagues and I being adversarial.... I was wondering whether this meant senior departmental officials engaging in a shouting match and the person who shouts the loudest gets his priorities responded to. Doesn't it suggest that priorities aren't established on the basis of a plan but on some other process instead?

Perhaps you could give me some insight into how decisions such as this really are made.

Mr. Jim Judd: Very briefly, sir, I'm happy to report that we have sustained no casualties so far in any of these discussions.

To some extent, I gather it has been an adversarial process in the sense that you have competition for a limited amount of resources, a finite amount of resources, coming from a whole variety of people with all kinds of great ideas, in their judgment, as to where the resources should be spent.

I don't know that it's any more adversarial than any other resource allocation process ever seen in either the public or private sector. But going back to what I was saying earlier, coming into the place new, my own sense is that we should be taking a look at a different kind of approach, one that tries to come at the establishment of priorities perhaps in a different way, in a more comprehensive and global way. I don't know that that would make it any less adversarial, though.

The Chairman: Mr. Rattray has something he would like to add.

Mr. Philip Mayfield: Yes. I just wanted to turn and ask.... Something, obviously, was in mind when this paragraph was put in here and I'd—

Mr. David Rattray: I'd like to build on this very comment, Mr. Chairman. I think what we've been trying to say in the written form here is that with a proper set of objectives, scenarios, with performance information, a financial information system that gives you enough data in light of setting that has clearer objectives, clearer expectations in terms of cost and performance, one can then allocate resources against that in a better environment than presently exists, which must go to a final best judgment at the end of the day or a resolution through an adversarial discussion.

• 1720

I'd go back to Mr. Pagtakhan's earlier comment about, “If I had a billion dollars...”. I would love to say, if a billion dollars were available, with good performance information, good scenarios, and good costing, one could allocate that and buy direct capability. And I think the defence department would want that.

That's the whole essence of what we're trying to put forward here. Instead of a billion dollars, you can spread it out evenly amongst everyone, which tends to sometimes happen. One could ask where are we shortest on capability? Where are we hurting the most? Where would the performance improve the most with the money available? That's how I would come back and say you could solve the procurement issue.

Mr. Philip Mayfield: Maybe I'll come back to that issue a little later, but—

The Chairman: You may not be coming back, so I'll give you a question now.

Mr. Philip Mayfield: All right then.

The chairman has mentioned that infantry and armour could be detected, engaged, and defeated long before it was known the enemy was present. To me this was a shocking statement, particularly in the light of the the deputy minister's statement that in terms of equipment and modernization, we're in pretty good shape. I'm concerned about this type of representation to Parliament.

What Mr. Grose said is, “I would love to do whatever I can so you can do the best job you can, but I have to know what's going on.” I'd like to encourage you and have your comments, just briefly, on your accountability to Parliament in this. It seems to me there's something lacking there that I yearn to have fulfilled.

The Chairman: Do you want Mr. Judd or General Baril to answer?

Mr. Philip Mayfield: I would like Mr. Judd to respond to that.

Mr. Jim Judd: We are striving to improve the way in which we make information available to Parliament and the Canadian taxpayer. Are we as good as we should be? Probably not, but we are trying to work on it to remedy those deficiencies.

On the specifics of your question with respect to the infantry capability, I wouldn't dare answer that one, because I have an infantry officer sitting next to me, and I would fear the consequences if I were to tread into his territory. But perhaps he would speak to it.

Gen J.M.G. Baril: I have two comments on the technical side. It depends who is looking at us, who can detect us, or who can engage us. I can tell you that where we are now in Bosnia, nobody can detect us or engage us before we can, unless we're talking about allies.

On reporting to the government, this year, for the first time, I believe, the Chief of Defence Staff is going to be reporting to the minister on an annual basis, which will be made public to the Government of Canada.

The Chairman: Thank you very much.

Mr. Philip Mayfield: Okay, thank you.

The Chairman: Dr. Pagtakhan, I'm not sure we'll give you the four minutes, but—

Mr. Rey Pagtakhan: Yes, not the four minutes.

I'm glad to hear that reassurance. I'd just like to pursue something very briefly. You said you had been advised in an earlier phase of your study and audit that these were the expectations for a given piece of certain equipment, and then what happened later on was that the actual purchase was for a set of equipment that, in the instance that was mentioned by the chair, would travel only a limited range of distance. Of course as a consequence, you had raised natural and legitimate concerns. But again, my question is, how would you respond to that? How did the change happen? Has the capability been jeopardized in a real sense?

Mr. Judd or General Baril.

Mr. Jim Judd: I would just say very briefly, sir, that I would trust and hope we would never do anything that would increase the risk to our forces in terms of the kind of equipment or training we provide for them, whether it's a domestic or an international operation. I don't know if—

• 1725

Gen J.M.G. Baril: I guess if the survival of the nation is at stake, we're going to go as we are right now. But if we're asked to provide men and women for the interests of Canada, then it will be known to the leadership of Canada what are the immediate capabilities that we can contribute within an acceptable risk that I feel I can take. Then if the leadership of our country wants to put the men and women more at risk, it shall be done that way. But the advice will be given.

For example, when the intention of the Government of Canada was to join the mission in the Central African Republic, I did make a recommendation to the Government of Canada, but not before I had my team in the country to tell me what the available risk was and what level of force and capability I would recommend to the government to deploy at that time. I made my recommendation only after my team was in place for 48 hours to evaluate the risk.

The Chairman: Thank you, Dr. Pagtakhan.

Mr. Grose, I think you had a closing comment you wanted to make.

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

Quite frankly, I'm a little bit more reassured today than I was. But I've heard that there's going to be a lot of ongoing work. The thing that fascinates me most probably is the updating of the avionics on the F-18.

I would like to hear in six months just what we have accomplished from today until six months from now. I hope you same people could spare us two hours of your time at that point and tell us how things are. Hopefully, they'll be better than they are today, but if they're not better, tell us why.

If it's—quite frankly, to be mundane about it—a case of money, that's our problem and we'll do something about it. But I would appreciate it if we could have an update six months from now on just exactly what has happened. If you upgrade your tanks, airplanes, and so on—

The Chairman: Well, I hope we'll be able to include that in the report so that you're forewarned and forearmed, if I can use a military expression, and so you'll know it will likely be coming down the pipe.

Mr. Rattray, do you have a closing comment?

Mr. David Rattray: Very briefly, Mr. Chairman, I'd like to just conclude on the point that I think Mr. Grose was putting forward, and that is that there's a role for parliamentary committees to play here. Either it's in this committee or in SCONDVA or in the recommendations that were still on the table that came out of the joint committee on defence that talked about an oversight and an active involvement in this.

The second point is that we're encouraged to hear that the department is continuing to work on better performance information for Parliament so as to have an informed discussion like the one we had today, and more so in the future. So I think we will continue to watch progress ourselves, and hopefully Parliament can play a more active role, as it has done today, in terms of what the money is buying in defence capability, and therefore what capability Canada can offer as commitments to its allies.

The Chairman: Thank you, Mr. Rattray.

There's one question I forgot to ask that I ask of every committee if I remember it. Y2K is around the corner. It's 19 months away. Both the Department of National Defence and our equipment are very much electronic-oriented, General Baril. Are we going to be ready?

Mr. Jim Judd: We have put in place what we hope is going to be a successful program to deal with mission-critical systems in the first instance. To go back to something the Auditor General raised, we're doing that on the basis of the various scenarios we're developing so that we're addressing the systems sequentially.

The Chairman: Will we be ready?

Mr. Jim Judd: I'll give you a better answer in six months. Right now, I can give you a hopeful answer.

The Chairman: The hopeful answer is?

Mr. Jim Judd: We certainly hope to be ready.

The Chairman: Okay.

General Baril, do you agree with that?

Gen J.M.G. Baril: Yes, I do.

The Chairman: Okay. So we look forward to a better answer in six months.

Gentlemen—

Mr. Philip Mayfield: Mr. Chairman, could I ask one brief question also?

The Chairman: Yes, very brief.

Mr. Philip Mayfield: It is very brief.

You know we've been talking about this 1994 white paper and working from that. Is there in your mind a need perhaps to refresh that or begin again from that point? Just be very brief, because it's the end of the day and I'm not trying to open up a whole new issue.

The Chairman: I'm glad to hear that.

First of all, does the 1994 defence paper still stand, or should we update it?

Mr. Jim Judd: I would think that the general principles that apply in the white paper, including the assessment of the international environment, are still generally applicable. The environment in 1994 was post-Cold War. There were a variety of different contingencies and threats internationally.

• 1730

The system we face now is essentially the same, and much of what has been done in respect of the department's budget in the subsequent years was, as I understand it, factored into the white paper when it was actually produced by the government.

The Chairman: Thank you.

General Baril, do you have a comment on that too? You're fine?

I understand that next Tuesday we're dealing with chapter 4. It'll be the same time, same place, and same people, so we look forward to everybody being back here then.

The meeting is adjourned.