Colleagues, we will bring this meeting to order.
Pursuant to Standing Order 81(4), we are considering the main estimates for 2015-16, including vote 1 under the Communications Security Establishment; vote 1 under the Military Grievances External Review Committee; vote 1 under the Military Police Complaints Commission; vote 1 under the Office of the Communications Security Establishment Commissioner; and votes 1, 5, and 10 under National Defence. This was referred to the committee on Tuesday, February 24, 2015.
Appearing before us today, for the record, is the Honourable Jason Kenney, Minister of National Defence, and the Honourable Julian Fantino, Associate Minister of National Defence. Also at the table and appearing as witnesses we have, from the Department of National Defence, John Forster, deputy minister; Lieutenant-General Guy Thibault, Vice Chief of the Defence Staff; Claude Rochette, assistant deputy minister, finance and corporate services; and Patrick Finn, assistant deputy minister, materiel.
From the Communications Security Establishment, we have Greta Bossenmaier, chief.
Joining us at the table a little later we will have, also from the Department of National Defence, Jaime W. Pitfield, assistant deputy minister, infrastructure and environment.
Welcome to all.
Minister Kenney, please give your opening remarks.
Thank you very much, Mr. Chair.
Thank you, colleagues. It's great to be back here with Minister Fantino and this distinguished panel.
I should just point out that the last time we saw ADM Finn, he was wearing a uniform as an admiral. He has since transformed into a civilian, but is still in service to DND. I want to thank him for his military service to Canada in our uniform.
Colleagues, it's a pleasure to be here to discuss the main estimates for the fiscal year we've just begun. As you know, we have made important, significant new investments in the capabilities of the Canadian Armed Forces so that we can project Canada's values and interests around the world and defend Canadians here at home.
If approved, the funds I am seeking would raise National Defence's total spending authorities to $18.9 billion for this fiscal year. These estimates demonstrate our long-standing commitment to the armed forces and the modernization and replacement of key platforms to enable them to continue to deliver excellence in operations. This is also reinforced by budget 2015, which raises the annual Defence escalator from 2% to 3%, beginning in fiscal year 2017. This will increase spending on Canada's military cumulatively by $11.8 billion over the subsequent decade. This investment is critical to keeping Canadians safe, critical to defending our interests, and critical to working with our allies and partners in the pursuit of international peace.
Here's what the Canadian Association of Defence and Security Industries said about that budget: “Not only is the budget balanced, which is a good thing for Canadians, but it provides a range of initiatives that are important to Canada's national defence and national security, which is all about keeping...us safe.”
Through the government's investments, the Canadian armed forces are making a meaningful contribution in a number of theatres around the world. I recently returned from a trip with the to visit the hard-working personnel currently deployed to Iraq and Kuwait as part of Operation Impact, where they are working closely with our allies to degrade the so-called Islamic State.
Frankly, it is remarkable, Mr. Chair. We talk about the division and geopolitical complexities in the Middle East all the time, but in the fight against Daesh, the so-called Islamic State, there is a coalition bringing together Arabs, Kurds, Muslims, Christians, Shia, Sunni and minorities such as the Yazidis and Assyrians. Almost all the countries and the peoples in the Middle East have come together to destroy this appalling threat to human dignity, human rights, the security of women and girls and, of course, Canada's security.
Coalition airstrikes are helping to degrade them. In northern Iraq, the Iraqi forces are gradually taking back ground east of Mosul. The and I saw this. A few months ago, we were at an observation station of the peshmerga, with the help of the Canadian special forces. This was a base, an observation point for Daesh, the Islamic State.
In central Iraq, in the west and everywhere, Daesh is losing territory. The Iraqis are reclaiming their own territories, partly because of the contribution of the Canadian Air Force and the assistance of the Canadian government.
We have personnel deployed in Central and Eastern Europe to demonstrate Canada’s solidarity with our NATO allies against Vladimir Putin’s aggressive policies.
We have military doctors, nurses, medics and support staff deployed to Sierra Leone to help fight the spread of Ebola.
We recently deployed the Disaster Assistance Response Team to Nepal, to provide humanitarian assistance following a devastating earthquake.
Mr. Chair, I'm happy to report that later this month, at the beginning of June, the Canadian Armed Forces will be deploying some 200 personnel to begin an important military training operation in Ukraine to assist our Ukrainian friends in being able to defend themselves and reduce casualties as they deal with Vladimir Putin's de-facto invasion of their country.
Mr. Chairman, the ability of the armed forces to contribute begins with a strong investment in defence.
In fiscal year 2005-06, National Defence spent $14.6 billion. In Budget 2006, we committed to raise baseline defence spending by $5.3 billion over five years, and that was incarnated in the 2008 Canada First defence strategy, which implemented the 2% annual defence escalator protecting the defence budget against inflation. It's the only department in the government that benefits from such a policy. And, most importantly, the baseline increase from the Canada First defence strategy has been used to acquire a whole new generation of equipment. It's been used to refit aging equipment and to modernize it, but also to acquire important new equipment. For example, the Royal Canadian Air Force now has a critically important strategic airlift capability. I just received in March our fifth C-17 Globemaster III.
Mr. Chairman, there was a time when if Canada wanted to respond to, let's say, to the tsunami in Southeast Asia in 2005, we had to go effectively begging from partners to lease a plane. I seem to recall we tried to send a C-130 across the Pacific and it had to turn back for repairs. That was the state of our ability to project ourselves abroad in case of emergency just a decade ago. But now, I was able to indicate to our military that we wanted to pre-deploy our humanitarian assistance and then the disaster assistance response team to help the people of Nepal, and within 36 hours we had Canadian troops on the ground with humanitarian equipment helping to save lives. That's why investments like this matter. There were five C-17 Globemasters, and in addition the very substantial new C-130J fleet that we have acquired for tactical airlift capabilities. All of these things by the way, including the two modernized Auroras that are now flying missions over Iraq, are aiding our military capability.
The refit and modernization of our Halifax-class frigates is fantastic. I invite members to visit some of our refitted frigates if they haven't done so. I was on the HMCS Calgary on Sunday last as part of Exercise Trident Fury. Really, we have world-class cutting edge capabilities aboard these frigates now, and as well there's the refit and modernization of our Victorial class submarines. Of course, there's also the modernization of our LAVs, our light armoured vehicles. There's the new M777 howitzer artillery pieces.
In addition to all of the equipment that we've successfully acquired or refitted in the past few years, I'm happy to advise the committee that the government will be investing $452 million to upgrade, replace, and modernize infrastructure on bases and wings across the country. I suspect that Minister Fantino has more to say about that.
All of this, Mr. Chair, is designed to maintain a flexible, capable military.
The main estimates were tabled in Parliament in February, and my department is seeking authority to spend $18.9 billion in 2015-2016.
This figure represents an increase in spending authorities of $280.5 million or 1.5% over the main estimates of last year.
I should point out that there were the mains, but as is usually the case, there was additional incremental spending in the supplementary estimates that totalled $20.1 billion at the end of the year. I would anticipate that will happen this year as well.
Interestingly, Mr. Chair, this year operating expenses for DND will be 8% higher than last year, but we will be spending less on capital expenditure authorities by some $700 million, primarily because equipment that we thought we would be taking possession of in this fiscal year, we either took early possession of or we believe we will be taking possession of in the next fiscal year. So there is always some margin for rescheduling the actual acquisition of equipment, and that changes the budget numbers on the capital side.
There is a slight reduction in grants and contributions of $9 million, primarily because all of NATO's contributing countries are reducing their transfers to NATO.
I'll close, Mr. Chair, by saying that we are doing hugely important work around the world right now, in eastern and central Europe, in Iraq and Syria, in Nepal, in Sierra Leone, and I want to thank the men and women of the Canadian Forces for doing us all proud in that work. With this budget we believe they will have the resources they need to do what we ask of them.
Thank you for the opportunity to address your committee alongside my colleague, Minister Kenney.
I would like to take a few minutes to discuss how the main estimates enable the Canadian Armed Forces and the Department of National Defence to continue defending the sovereignty and security of Canada.
One of my responsibilities as associate minister of Arctic sovereignty, with the increased activity, commercial shipping, natural resources exploration, and even tourism in the north, along with Russian military activity, makes it ever more critical that National Defence has the right monitoring capabilities and the emergency response options to meet the many current and emerging challenges that we face.
Mr. Chair, last month I visited Operation Nunalivut in Cambridge Bay and the Nunavut area to get a sense of how the military conducts northern operations. I also had the opportunity to visit the Joint Task Force North in Yellowknife, and the 1st Canadian Ranger Patrol Group, our eyes and ears in the Arctic.
Mr. Chair, our work in the north to ensure Canada's sovereignty is both impressive and, indeed, vital. Moreover it is critical that National Defence continue to have the right policies and resources in place to protect Canada's northern interests and enable the Canadian Armed Forces to fulfill its responsibilities in this regard.
Another major responsibility of my portfolio is information technology security and foreign signals intelligence, which serve to protect our national security and, of course, our interests. While this might be more abstract, its effects are unequivocally tangible and, indeed, critical. Continual exponential advances in communications technologies are transforming almost every aspect of our lives.
The Communications Security Establishment, CSE, has a vital role in protecting and defending federal government systems from malicious attacks each and every day. National Defence also plays a supporting role and has a great interest in protecting its systems against cyber threats, given the military's reliance on cyberspace to enable its operations, and as we have seen recently, cyberspace is increasingly a prime target for both terrorists and malicious cyber actors.
Mr. Chair, let me be clear. The Government of Canada networks are attacked millions of times every single day, and those numbers will certainly rise. The new reality of modern warfare is here. The digital battleground, as we have witnessed, ranges from recent ISIS cyber attacks to Russian cyber aggression against Ukraine.
Mr. Chair and members, these are just two areas where the Canadian Armed Forces and the Department of National Defence work hand in hand every day to defend and protect Canadians and our interests. The main estimates are a critical part of ensuring that the necessary funding is in place to enable operations to continue.
I should note for your benefit that one noteworthy item from the main estimates is CSE seeing a year-over-year reduction of nearly $301.6 million. This shrinkage is one time, an exceptional occurrence, as it is the result of payment of $306.7 million for contract costs related to the construction of CSE's headquarters in the year prior.
With that, Mr. Chair and members, I will bring my remarks to a close and I would be happy to take your questions.
Yes, as I mentioned, in 2008 the government formalized an annual 2% escalator for the DND budget. We've announced an increase in this year's budget to a 3% escalator, beginning in fiscal year 2017-18, which we estimate will represent an accumulative 10-year increment of $11.7 billion, which is very considerable. You ask how this will be used. Well, it will be used on, of course, the basic operations, but any incremental funding will be reflected in the priorities of the military.
The most important thing here is that this represents long-term stable, predictable growth in funding. That's what our military commanders need for planning purposes. This also means that the defence budget will grow in real terms—that is to say, typically the consumer price index in Canada is at 2% or below, so this means real long-term, sustained growth.
I should mention that this is in addition to the accrual envelope that we have as a set-aside, a lockbox fund for capital procurement, which is in the range of $107 billion over the horizon of 20 years, or two decades. Most of that $107 billion over two decades has been committed, but some of it still is available. I believe that $17 billion is not yet committed for future equipment that is identified as a priority for procurement.
There are two dimensions to my answer, Mr. Chairman.
First, we think, given the aggressive posture of Vladimir Putin, it is critically important that NATO demonstrate a message of resolve and deterrence. The worst thing to send an aggressor like Vladimir Putin is a message of weakness and uncertainty, because that could lead to a miscalculation.
Mr. Putin has expressed, effectively, a new political strategic doctrine. It's hardly new for Russia, but he has rearticulated a traditional Russian doctrine that Russia has a right and responsibility to “protect” russophone minorities anywhere they live, and that includes Romania. That includes the Baltic States. That includes Poland and Hungary and, indeed, obviously Ukraine as well as other countries in eastern and central Europe. This was the pretext for his invasion of Georgia. It has been the pretext for his illegal annexation of the Crimean territory of Ukraine and his support for and de facto invasion of the Donbas region and the eastern oblasts of Ukraine.
So given the sizable russophone minority in other eastern European countries, most particularly the small Baltic States, we and our NATO allies feel it's essential that we send a message of unity and resolve, which is why we are supporting Operation Reassurance, in which Canada's CF-18s have flown Baltic air policing missions. I can report that the HMCS Fredericton has been in the Black Sea and will shortly be doing patrols in the Baltic Sea. We have sent 250 Canadian infantrymen who are now stationed on joint exercises in eastern Poland, and our air force assets were located for a while in Romania. All of this sends a message of resolve.
In addition to that, outside of the NATO context, we are demonstrating solidarity with Ukraine in defending its territorial integrity, which is why we have announced the deployment of some 200 military personnel to Ukraine to provide such things as explosive ordnance disposal training, improvised explosive device disposal training, military police training, medical training, flight safety training, and logistics system modernization training.
Most of this will occur in the extreme west of Ukraine between Lviv and the Polish border in a training camp established in part with the assistance of Canada and the United States in a place called Yavoriv. It's some 1,300 kilometres away from the actual conflict zone in eastern Ukraine. This in addition to the provisioning of non-kinetic equipment to Ukraine and our diplomatic, political, and trade support such as the free trade negotiations, is all designed to send a message of resolve to support Ukrainian sovereignty.
Unfortunately, the minister does not spark my interest today.
Mr. Kenney and Mr. Fantino, thank you for your presentations. I appreciate the information you have provided to the committee, but I would have liked to have the written documents before you read them. It would have been easier to follow along.
I too would like to go back to the whole issue of the Deschamps report and General Lawson's directives. My family has a long military tradition and, when I see things like that, I honestly find it troubling. I have read the Chief of the Defence Staff's statement, which you have circulated, and I heard you say that it should not be viewed as restrictive orders. However, I think that sends a rather negative message on the intentions of the office of the Chief of the Defence Staff.
The Canadian armed forces are having problems with recruitment right now, especially in the primary reserve, whose personnel is well below the 27,000 members it should have. Under those circumstances, do you really think it will be possible to reach the recruitment targets? Actually, we cannot even assure the men and women who proudly serve in the Canadian Forces that they will be safe in their workplace and that they will have access to the necessary resources to take action if they are going through difficult situations.
How can we tell the parents of these men and women that we will be taking good care of their children when they are putting their lives on the line to protect Canada? This troubles me. Could you comment on that?
Thank you, Mr. Bezan. I know this is an issue very close to your heart.
I understand we had a delegation of the Ukrainian military police in Ottawa yesterday here to learn, and, indeed, one of the specific requests that Ukraine has made of Canada in terms of capacity building is in the area of military police.
The Ukrainian military, as you know, has sadly been subject to many of their capabilities being degraded over time thanks in part to bad leadership at the political level. The previous president ended up ensuring that friends of his ended up receiving large chunks of the military budget as opposed to the actual military. This has really atrophied many of their capabilities, including in the area of military police.
But also I understand the Ukrainian troops have been incurring disproportionately high levels of fatalities as a result of combat casualties in combatting Russian and Russian-backed troops in the Donbas region, so we believe the medical first aid and medevac training that we will provide will help to reduce casualties by increasing their ability to provide critical first aid.
Similarly, the flight safety training will be very helpful to Ukrainian forces in reducing casualties, as will the training with respect to the detection and disposal of improvised explosive devices.
But the core of our training operation, which will occur in Yavoriv, in Galicia, in western Ukraine, will be general combat training that will start with units from the Ukrainian National Guard and eventually will move to units from the Ukrainian army. We'll be doing this together with the United States.
One last point. Shortly after I became minister, I announced Canada would begin providing radar satellite imagery that we obtain to Ukraine so they can better detect strategic movements across their border with Russia. This was something that President Poroshenko specifically asked of Canada when he visited us here last September. We believe that, and the non-kinetic equipment we have delivered tons of—I think you were involved personally in some of that—have been extremely well received. In fact, I've spoken to Ukrainians who say the Canadian winter gear, for example, was the most popular item available in the Ukrainian army. They gave it a nickname. They called it Kanadki. Apparently this has really helped to raise the profile of Canada-Ukraine, which I think is a wonderful expression of solidarity.
Yes, Mr. Chairman, we have committed assets to NATO's Operation Reassurance since last summer, including currently the deployment of some 250 army personnel situated in Poland. They have been doing joint exercises and training in the Baltic states, in Poland and elsewhere. A number of those soldiers currently come from Garrison Petawawa.
In addition, of course, I mentioned the Baltic air policing rotation led by four Royal Canadian Air Force CF-18 Hornets last autumn, as well as the deployment of the naval asset, the HMCS Fredericton, in the Black Sea. They have also been on joint exercises with other NATO countries, and I understand they will be deployed to the Baltic Sea in the near future.
In addition to all of these things, there will be some very large-scale NATO joint training exercises this summer to which we will be contributing an estimated 1,000 military personnel. That's not formally part of Operation Reassurance, but it sends the same message: a message of strength, coordination, and determination in the alliance; a message we know Mr. Putin is hearing.
In fact, when the HMCS Fredericton was last in the Black Sea, Russian military aircraft flew around it and over it to demonstrate they recognized our presence in the Black Sea. As far as I'm concerned, the message is being sent that Canada is there and we are part of the alliance.
We see that the Parliamentary Budget Officer did a baseline study by looking at other countries and costs. It factored in an inflation cost per year.
In fact, if you take a close look at the report, you will see that, for the years 1994, 1995, 1996 and 1997, it calculated the expenditures by adding an increase for inflation. It compared the current structure of the Canadian armed forces to the one that was in place in 1994. In so doing, it concluded that the funding was not sufficient. However, if it had concluded that the structure of the forces was similar to1997, it would have drawn a completely different conclusion, meaning that the funding was sufficient.
Another problem is that something else was overlooked.
The minister talked about the cost of the 2% budget increase. In fact, in 2017-2018, it will go up by 1%, but there has been a 2% increase since 2008 already. That is already in effect, but it was not factored in.
In addition, the administration and managerial decisions have not been taken into account. We often look at the budget available and try to eliminate the less important activities and reinvest in our priorities. In fact, we are now reviewing our activities. However, that is not taken into account. When that happens, we can—
I'm going to talk a bit about military equipment, which is so critical to the safety and well-being of our armed forces members—their ability to train, to be part of operations, and not having aged equipment parked for very expensive maintenance. Unfortunately, the 2008 CFDS, Canada's failed defence strategy, has been a road map to nowhere in terms of equipment for the last number of years.
I just want to note that since the 2007-08 capital budget, the average amount announced as a vote 5 expenditure but not spent—in other words, clawed back—has been $7.2 billion. That is money that Parliament approved but was not spent. That's an average of 23% clawed back. I will just note in comparison that for the 30 years prior to that, the average vote 5 funds left unspent was 2%. That's 23% versus 2%. I would hate to think that this government deliberately failed to provide our troops with the equipment they need, sacrificing them to pay for election tax breaks. Whether it's destroyers, patrol ships, resupply ships, icebreakers, close-combat vehicles, armoured patrol vehicles, drones, CF-18s, or Buffalo and Hercules search and rescue aircraft, most of the major procurement projects have been bungled and not actually delivered.
Minister, which of those replacement programs will actually be initiated this year? That's my first question.
My second question relates to something the minister previously claimed, that the capital equipment budget was reduced by $700 million and that some of that reduction was because the Canadian Armed Forces took early delivery of equipment previously, leading to a reduced need for capital spending.
What equipment was delivered early that would account for your statement?
Okay. That's very effective questioning, Mr. Chair.
The member suggested that there has been no equipment obtained, except she forgets the five C-17 Globemasters, the 17 C-130J Hercules tactical aircraft, the 15 CH-147F Chinook helicopters, the modernization of the Hornets, the modernization of the Auroras, the modernization and refit of the Halifax-class frigates, the commencement of the largest shipbuilding program in peacetime history, the upgrades to the light armoured vehicles, the new fleet of tanks, armoured personnel carriers, and precision guided artillery, etc. Compared to the Liberal procurement from 1993 to 2005, a list of which I have right here, Mr. Chairman....
Her leader refers to our CF-18 modernized Hornets as “aging warplanes”. I can tell you that's not how ISIL feels about them right now, Mr. Chairman.
I will say that if the member wants yet again—I know that she has been on this committee for a while—a detailed explanation about how capital spending moves from one year to another based on a number of factors, I'm sure that ADM Finn or other officials would be happy to provide that to her.
None of this is, as she characterizes it, clawed back. She must know by now that that is simply a false assertion. None of it is clawed back. To the contrary, central agencies—Treasury Board and so forth—have thankfully given to the Department of National Defence the ability to profile into future years moneys for the accrual budget that are not actually expended. Would the member have us instead lose the money in a given year if we're not prepared to accept equipment because it's not yet ready? You know, when you're dealing with $110 billion, grosso modo, in the accrual budget over 20 years, it's not all going to be spent in exactly the years that you planned. There are going to be some changes in terms of timing. The member, I think, should....
I'll leave it to Ms. Bossenmaier to respond if she has the time, Mr. Chair.
Mr. Minister, in previous questioning my Liberal friend across the way failed to mention a $600 million cheque written by the then Liberal government for the cancellation of the EH-101s, which we now have to buy at about two or three...and you can comment on the real cost of that. Today translated—I am told by military personnel who are now retired, because they don't speak when they're not retired—that would equate to over $1 billion in today's dollars, well in excess....
Of course, one of the great purchases by the previous government for a buck was some submarines that at a great cost now are of benefit to our navy. I wonder if you could comment on how much it cost to refurbish those?
In regard to improvements to the LAVs , the previous Liberal member in my riding talked to my Rotary club about this great deal for us that we know had no safety components, and of course we now have improved LAVs and I know that our government improved their capabilities because of the experience in Afghanistan.
I think one of the benefits to our soldiers was the use of the Chinooks in Afghanistan so they wouldn't have to drive over roads peppered with IEDs. We had to buy back or borrow Chinook helicopters from the Dutch, I believe, that still had Canadian markings on. Now we have of course ordered Chinooks.
All politics are local. At CFB Trenton I was present when the then leader of the opposition, along with , who was your predecessor as Minister of Defence, talked about our strategic and tactical lift, which means a lot to the people of Trenton because to facilitate those two abilities of our air force, we had to begin a huge capital project—and not only at CFB Trenton.
So I wonder if you might like to comment on some of the issues that I have brought up?
Yes, Mr. Chair, of course I agree.
What Ms. Murray depicts is not the reality that I encounter when I visit our bases and see the pride of our Canadian Armed Forces personnel in presenting, and talking about, and demonstrating their new equipment.
Just to give you one example, in CFB Trenton, your base, it's one thing to buy the C-17s, and not just four of them, but now a fifth one.... That fifth one, by the way, now means that we'll be able to have three of them operational 90% of the time , meaning that we can respond to multiple crises concurrently rather than getting in queue.
There was a deliberate policy decision of the previous Liberal government, a deliberate decision, not to have strategic airlift. I don't know why. Is it because they didn't actually want to have to say yes when urgent situations arose?
But not only did we acquire four, we acquired a fifth so we can actually have a strong appropriate maintenance rotation cycle. We didn't just acquire the planes. As you know we built an enormous hangar, two cutting edge maintenance hangars, for the C-17s at CFB Trenton.
Just look at the simulation equipment for training our pilots that we've now installed at CFB Trenton. These are very expensive systems that, by the way, are expensive up front but efficient in the long run because it's more efficient to train pilots on simulators than burning aviation fuel.
Wherever I go, whether it's visiting HMCS Chicoutimi, the modernized and refitted Victoria-class submarine in Esquimalt, or HMCS Calgary, or see at Garrison Petawawa the incredibly sophisticated new howitzer artillery pieces they have, everywhere I go I see new kit, highly motivated personnel, and a military that appreciates the fact that the Government of Canada is actually willing to use our military assets appropriately and prudently to protect our security, collective peace, and respond to humanitarian disasters.
I just ask people to compare our ability to respond the Nepalese earthquake versus the gong show of the government response to the tsunami in southeast Asia in 2005. The difference is investments in equipment. Of course, the personnel have always been professional but now they can actually get to where they need to go.