NDVA Committee Meeting

STANDING COMMITTEE ON NATIONAL DEFENCE AND VETERANS AFFAIRS

COMITÉ PERMANENT DE LA DÉFENSE NATIONALE ET DES ANCIENS COMBATTANTS

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 27, 2001

• 1602

[English]

The Vice-Chair (Mr. David Price (Compton—Stanstead, Lib.)): I'll call this meeting to order.

Colonel, first of all, we have to apologize. We were caught in the House due to votes. It does cut into your time, unfortunately, but we'll try to move things along and try to keep the questions compacted. You might also notice that I might give you a little time to try to speed things up along the way.

I won't take any more time. Thanks very much for being here. Please go ahead.

[Translation]

Colonel (Retired) Brian S. MacDonald (President, Atlantic Council of Canada): Thank you, Mr. Chairman.

[English]

I have certainly been in front of committees of this House and of the other place often enough to understand what happens in Parliament and that things do not always commence as planned.

First of all, let me thank you for inviting me to the deliberations of your committee on this particular subject, which is one I have looked at for quite some time and have been very much concerned about. Since I have given the committee a copy of the background paper I have prepared, I don't propose to read it to you. Instead, I'll simply highlight one or two of the points that I feel should be made.

I entitled this particular paper “The Coming Mass Extinction of Canadian Forces Operational Readiness in 2010-15” simply as a means of highlighting the reality that, through the accidents of history and the procurement process, we have a very large number of major platforms in the Canadian Forces coming to the end of their service life during that period of time. The question that comes then is whether or not the capital budget will be adequate to replace the capabilities that will have ended their service life at that point. It is my view that the capital budget is inadequate to doing that task. Therefore, the Canadian Forces will be placed in the invidious position of having to somehow attempt to cope with the fact that the money is simply not there to maintain the capabilities stated to be government policy in the 1994 white paper.

I think it's appropriate to make a couple of technical remarks with respect to the fundamental problem of military capabilities depreciation, and to argue that from the moment a platform is delivered to the forces, two separate depreciation effects are taking place. The first, of course, is simply that of normal wear and tear, which can be dealt with in the normal maintenance cycle. Of course, at some point in the service life, the maintenance costs begin to escalate rather rapidly, and it then becomes a question of whether you're further ahead to simply replace the equipment or to continue to maintain it.

• 1605

But it's the second area of depreciation that concerns me much more strongly, and this is the area that I refer to as technological depreciation. This is a different process. It is a process driven by the ever shortening technology cycle that we are experiencing, and particularly the technology cycle in the civilian economy. This is driven by our friends to the south of us, who at this stage are investing something in the order of 50% of all global research and development in information and communications technology. In the military area, they account for approximately two-thirds of global R and D in this area.

This issue is critically important because when we're dealing with technological depreciation, we're not simply looking at absolute terms, but rather at relative terms. A piece of equipment may be usable, but if it has not been in a position of being able to keep up with the technology cycle of competitors or allies, then it has become obsolescent in relative terms, and perhaps even obsolete.

This process is no stranger to those who look at these items in the civilian world. Indeed, the national revenue system allows for accelerated depreciation. In fact, one comment made the point that even accelerated depreciation may be inadequate, and in effect argued a de facto technology cycle of perhaps five years in terms of computers and things of that nature.

This brings me to the other point I would like to make, and that is the item of the capital budget of the forces. I have looked at a number of aspects of it, and as a means of doing time-series comparisons and cross-country comparisons, I preferred to look at it as a percentage of gross domestic product.

At the time just before the end of the Cold War, we were expending approximately one-third of one percent of gross domestic product on recapitalization of the military. According to the NATO figures, we are currently expending approximately one-tenth of one per cent on recapitalization, which is effectively a decline of two-thirds. My argument is that this rate is inadequate to recapitalize the platforms that we have in place at this point. If one wanted to convert that to dollar terms, if we were recapitalizing at the 1990 rate, we would have a capital budget of approximately $3.5 billion a year at this stage, as opposed to the capital budget of approximately $1.2 billion. So there is a vast difference in the availability of capital for the replenishment of platforms and technologies.

I would further make the point that I'm somewhat concerned about the division of the defence budget into its personnel, operations and maintenance, and capital components. I recollect that in the 1970s, we saw a rundown from a capital component of 25% of the budget in 1959-60, to 9% in 1972-73—the so-called rust-out decade of the Canadian Forces, from which it took a great deal of time to recover. I fear we may be seeing a repetition of that, because when I look at the pattern in the last few years, I see something quite similar to that. In 1987-88, for example, we were spending 21% of the budget on equipment and capital renewal. In 1999-2000, that had declined to 8.2% of the defence budget.

There is, however, an interesting difference in those two periods. In the early period, it seemed we were concentrating on maintaining a personnel structure at the expense of capital, because personnel expenditures rose from 46% to 67%. Strangely, in the contemporary period, the personnel share of the budget is also declining, and it seems both capital and personnel are now being crowded out by expenditures on operations and maintenance. Here, I sometimes wonder whether or not, in our move to shift toward items such as alternative service delivery, we are perhaps having the unintended consequence of seeing a shift of funding from capital renewal and from the maintenance of skilled personnel to increased operations and maintenance costs.

• 1610

Mr. Chairman, since you have a copy of the text, and given the pattern of this committee in the past in terms of liking to have the opportunity to exchange in dialogue, I will stop there.

The Vice-Chair (Mr. David Price): Thank you very much, Colonel. That's appreciated, because that is the way we like to do it. We do like to go with the questions.

We'll start with Mr. Benoit, with a seven-minute round.

Mr. Leon Benoit (Lakeland, Canadian Alliance): Thank you very much for your presentation, Colonel. The information has been very interesting. I'll just make a couple of comments before I get into my questions based on your written presentation.

Even in your written presentation, you mention, for example, the Sea King helicopters. I believe their anticipated life was 1963 to 1995. We have seen a life extension to 2000, and now to 2010. That's the earliest you'll see any number of Sea Kings replaced, if any. So the numbers you have certainly are probably on the conservative side, which is kind of a sad commentary.

The most interesting material you have in your written presentation is on the budget for defence, and you talked about it in your oral presentation as well. The fact is that the capital side of the budget has been reduced even more dramatically than the overall budget, and that's saying a lot when you look at the overall budget had it been maintained at the 1990 level. I believe you were talking about the level in 1990, which was 2% of GDP. At that level, we would have a budget of $21 billion per year right now, just maintaining it as it was then in real terms, adjusting for inflation. That's very interesting information, because our budget is actually about $11 billion, which is barely over half of what it was in 1990 in real dollars. That's quite a shocking cutback.

Now, that's the overall budget. When you then look at the equipment budget, it is really just unbelievable. I guess it's no surprise that we see what we see in the area of equipment when we look at the very severe cutbacks in dollars spent on equipment.

If I could get you just to put that into some other terms, pick the five pieces of equipment that you think are most urgently in need of replacement now. What budget do you think we should be planning on, looking at increasing it between now and ten years from now? What particular pieces of equipment should we focus on for replacement on a most urgent basis? Secondly, what budget level should we really expect in the Canadian military ten years from now.

Col Brian MacDonald: First of all, to pick up on your reference to the Sea King expiry date, that is not my figure. It is a figure that was drawn from the report of the special joint committee of the Senate and the House of Commons. In a sense, it is your number, which I simply repeat.

With respect to the issue of an appropriate budget, if we are to be able to replace the major platforms and capabilities that we have now, we would probably require an annual increase in the capital budget that is between $1 billion and $1.2 billion. That's on top of the current spending this year.

Mr. Leon Benoit: Are you saying we need to increase the base budget by that amount annually?

Col Brian MacDonald: That's increasing the base capital equipment spending budget, yes. That is correct.

Mr. Leon Benoit: All right, that's certainly well beyond what has been proposed in anything I've heard so far. The Conference of Defence Associations said it would take $1 billion to $1.2 billion a year just to stop the bleeding, and that wouldn't allow for any capital replacements. If you're talking about a capital replacement increase of $1 billion to $1.2 billion a year, you're looking at a $2-billion to $2.5-billion increase in the base budget at a minimum, which is well beyond anything that's planned.

• 1615

Col Brian MacDonald: If I may give you an example of this problem of platform replacement cost growth, when we bought the CF-18s in 1980, the average unit cost was $37 million Canadian. That included the fly-away cost of the airplane, plus additional sums for spare parts and a variety of other elements of the budget.

If we were looking at a variety of possible replacement aircraft in 2000, simply on the basis of the fly-away cost as opposed to the full system cost, the current prices that I've seen for the F-18C/D—which is the generation beyond the one we fly—would amount to about $75 million Canadian per airplane. If we went to the F-18E/F, which is a bigger airplane, the per airplane fly-away cost would be in the order of $126 million Canadian. If we went to an F-22, the fly-away cost seems to run between $150 million Canadian to $225 million Canadian per airplane. And then we have the JSF fighter, which has as its objective, as you know, a fly-away cost of $30 million U.S. or $45 million Canadian.

If one took the JSF and converted it not into a fly-away cost, but into a whole project cost, then we're probably looking at something in the order of $68 million per airplane. Taking that to an establishment structure of a squadron of sixteen airplanes, we're looking at about $1 billion per squadron. You then add in the number of squadrons you want as fighting squadrons, plus the training, lead-in squadrons. You can therefore see the way in which the costs of the platforms are continually beating us to death, largely because of the increase in the technology costs. We are seeing an airplane that is far more capable and far more effective, but the cost of that effectiveness has hit us with a very sharp escalation.

Mr. Leon Benoit: Wouldn't that make an even stronger case for having the maritime helicopter replaced with at least the same airframe as the search and rescue helicopter? Those other costs you're talking about are substantial—the costs that aren't directly included in the cost of the aircraft itself, like the flight simulators, the training, the maintenance, and preparing technicians to do the maintenance on this new type of aircraft—yet the procurement process to replace the Sea King is clearly being directed toward Eurocopter.

The Vice-Chair (Mr. David Price): You're already over by a bit. I'll give the colonel a minute to reply.

Col Brian MacDonald: I would simply say that when you're dealing with any helicopter, you're talking about the airframe and the things that go into it. You can decrease the cost of the system by decreasing the number and complexity of pieces that go into it. In terms of commonality, of course, if you have a number of helicopters using exactly the same airframe, then you achieve economies in terms of spare part buys, and also in terms of the training of people who have to work on those.

The Vice-Chair (Mr. David Price): Thank you very much.

[Translation]

Mr. Plamondon, do you have any questions? You have seven minutes.

Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ): Thank you, Mr. Chairman.

I question all of our military spending as regards the following. Canada's territory is bigger than that of the United States. Canada has a population of 30 million and the United States of nearly 300 million. It is therefore impossible for us to have a military of the same scope as the Americans to protect our territory.

That's why I feel we should stop trying to be a jack of all trades, that is, to have a good air force, good ground forces, a good force for international missions and to spread our money thinly. In fact, if there was a conflict, Canada would not be able to defend itself for very long given its current military resources.

• 1620

Therefore, doesn't the future lie in specialization? Let me explain what I mean. We could sign an air defence treaty with the United States and concentrate on building a very competent ground force and perhaps even a medical force specializing in international missions. If the UN asked Canada to provide help for any type of mission, we could send our specialized and extremely competent medical troops. We would spend the money that way rather than on couple of helicopters or aircrafts which, in fact, are peanuts in the area of international defence.

When we participated in the Gulf War, we had almost nothing. We contributed a handful of planes, a couple of ships, as well as helicopters. Would it not have been better to make a single contribution, but one which made a difference? Instead of continually increasing the defence budget, don't you think it is time that we rethink the entire situation and become specialized in one area under the framework of a NATO plan?

[English]

Col Brian MacDonald: Certainly, these are possibilities. In the approach to defence policy, it is useful to look at the options available, and to then weigh those options in terms both of their affordability and, even more importantly, of their potential impact upon, firstly, our foreign policy, and secondly and still more importantly, the question of our sovereignty.

I would be very concerned if we were to make arrangements with the United States that in effect ask them to exercise fighter airplane sovereignty and patrol sovereignty over Canadian territory. I keep hearkening back to that little one-liner that says every country has an army, either its own or somebody else's. I would prefer to have our sovereignty as the responsibility of Canadians.

If you want to go from that position to a broader foreign policy issue and look at, for example, the elements of the 1994 white paper, you can begin to think about that in terms of the white paper's argument for sovereignty or, if you will, homeland defence—to use that new term—and its dedication to deliver, at the same time, the expeditionary capability of a brigade group, the wing, the squadron of transport, and the naval task group. If your desire is to reduce the defence budget to the lowest possible extent, it is possible that you may wish to look at that expeditionary capability as something that is a nice to have, but not as necessary as a reasonably robust homeland defence.

[Translation]

Mr. Louis Plamondon: You talked about territorial sovereignty in terms of defence. I submit that with our current forces, or even with the forces we would have if the amount you mentioned was invested, our territory is much too big to be protected. In reality, it is not protected and we are neighbours with a friendly country. I come from Quebec and I realize that 75% of our exports go to the United States. That figure is almost the same for Ontario. So we share the same economy and one day we may even share the same dollar. We have exactly the same interests. Whom must we protect ourselves against?

I am not asking for the United States to protect our air space. We should have a certain amount of radar protection and some warning stations, but I feel it is time we stop spreading the money over many areas and that we spend it more intelligently by focusing on one or two areas which would be much more useful for NATO, as well as the military, since there would be enough money to excel in a chosen area.

For instance, if we decided that we should specialize in medical services on peace missions, we would train the best medical military personnel. When people think of Canada, they would think of our medical corps. Another country could specialize in providing ground troops. Other countries could focus on other areas.

• 1625

We are all part of a large organization, called NATO. Why does every country need to have its own F-18s, warships or military helicopters? No, I think everyone should have one area of expertise. In that way, the system would be more useful and efficient.

In my view, it would be less costly. This is what is happening everywhere with globalization. A company does not produce all kinds of furniture anymore. It specializes in the manufacture of a certain type of furniture. That's how it works in business and that's how it should work in the military. There should be international agreements with NATO and every country should have a specialty. It would be much less costly. We are currently spending $10 or $11 billion on defence, and not even a billion dollars in development aid. I think we should question this situation.

The Vice-Chair (Mr. David Price): Thank you, Mr. Plamondon.

[English]

Colonel, you again have about a minute to respond.

Col Brian MacDonald: Yes, sir. I'll respond very quickly.

The idea of complementarity is an interesting idea. The problem is that if you are in a situation in which your ability to carry out an action is dependent upon the complementary partner delivering a capability to you, the question you must somehow be prepared to deal with is what will happen if, through some circumstance, that partner does not supply the complementary capability as a matter of accident or as a matter of policy. These are some awkward areas I would want to look at very closely before pursuing the policy of complementarity as a de facto national policy of Canada.

The Vice-Chair (Mr. David Price): Thank you.

Mr. Peric, for seven minutes.

Mr. Janko Peric (Cambridge, Lib.): Colonel, you mentioned the depreciation, and suggested we would have to buy new or replace old equipment every five years. You're probably familiar with the NATO situation specifically in regard to new members and new countries. Where would you put Canada when comparing their capability and our capability?

Col Brian MacDonald: That is a complex question, because you're talking about states of considerably different sizes. The added difficulty on their side is that they now must bring equipment into complementarity with NATO equipment. They are then faced with the problem of replacing outdated Warsaw Pact equipment. So this is a comparison I would find very difficult to make, quite frankly.

Mr. Janko Peric: In other words, you would probably agree with me that we are much further ahead than them, and we're still members of NATO.

Col Brian MacDonald: That is correct. It is interesting, however, that in the case of the new NATO states, the expectation has been that they will accept the requirement to have a defence budget approaching 2% of GNP in order to begin this process of upgrading the technology of their forces to meet NATO standards. In a sense, then, one is looking at a process on their side that is tracking up to meet the standard, whereas when I look at our side, through the inadequacies of the recapitalization budget, I am seeing a tracking down from the standard that we have had.

Mr. Janko Peric: Would you agree the role of our military forces is different from that of those of the United States, and that it's impossible to compete with them? Their military defence is tremendous, it's huge. It's very difficult for us to live beside them. Our capabilities and defence budget are almost zero when compared to theirs, so how can we compare ourselves to them and play the same role?

Col Brian MacDonald: I don't think we've ever attempted to play the same role as the United States. We have sought different roles. We have certainly placed our forces in a structure in which they have a much less expeditionary capability than the Americans have. In that sense, it is perhaps not appropriate to insist that we should be attempting to be everything they are, because our national interests do not run in that direction. Having said that, though, when one looks at the alliance structure we are in, one accepts the requirement to play a significant role, even though it may not be as grand a role as the United States plays.

• 1630

Mr. Janko Peric: Thank you.

The Vice-Chair (Mr. David Price): Are you finished, Mr. Peric? You still have four minutes left. Did you want to hand them off to someone else? Yes?

Okay, Bryon, you're next on the list.

Mr. Bryon Wilfert (Oak Ridges, Lib.): Colonel MacDonald, Canada has never had large standing armed forces. However, we have always responded very effectively, including during the Great War, the Second World War, and the Korean War. We have been able to defend our sovereignty. I was going to go a little down the road of my colleague across the way, except I'm not prepared to cede any sovereignty to anyone.

If I read you right, your central thesis is that although we're more combat-ready today, we are not necessarily prepared for what is down the road. But how do we know what is down the road, given that the nature of what we are called upon to respond to as a state has radically shifted since September 11 in terms of the types of operations we may need to do, both now and in the foreseeable future, at least in the international war on terrorism?

Would it be reasonable to assume that some form of specialization... obviously we have to deal with the issue of ground forces, the air force, and the navy, particularly in our role as a NATO member and in our role in NORAD. Would it be advisable to deal with all three areas, but also to look particularly at specialization in one in order to be an effective arm in some way in responding to an international crisis?

Col Brian MacDonald: This issue of specialization is a tricky one. As the previous member pointed out, specialization implies a degree of complementarity, which in turn implies a lengthy negotiation process with our alliance partners to determine which capabilities we would be prepared to assume and which capabilities others would be prepared to assume. If we were going in that direction, we would more likely focus upon our relationship with the Americans rather than our one with the Europeans, partly because the events of September 11 have brought home to us the requirement of the defence of North America as a priority—which we've always acknowledged in the Canada-U.S. arrangements that are now more important than they used to be.

In that sense, I think it is perhaps appropriate that we pay attention to some of the directions in which the American forces are going as they begin to look at their future. In the United States Army, you have such things as the emphasis upon the Interim Brigade Combat Team, which is built not upon light forces but upon medium forces, and which uses the Canadian-produced LAV III as its interim vehicle.

An interesting emphasis is also coming out of the thoughts of the current Secretary of Defense and a number of those around him, such as Andrew Marshall. That emphasis focuses upon the revolution in military affairs, and sees it as the long-term means by which American superiority will be maintained. It also has the impact of perhaps suggesting a reallocation of resources between the three services and between different capabilities within services. For example, Donald Rumsfeld seems to take the view that strategic bombers are now a viable option, though this is a rather interesting change in perspective from years previous.

Mr. Bryon Wilfert: If I might be permitted, Mr. Chairman, I'd like to look at the Australian comparison.

There has been a lot of discussion about Australia, Colonel, and whether or not we should be looking at what that country is doing, and whether or not some lessons can be learned from the Australians. Would you comment briefly on that?

Col Brian MacDonald: Lessons can be learned from virtually any military force in terms of seeing what they are doing and what they are thinking about in regard to their own regional strategic perspectives, and in regard to seeing whether or not a model has relevance for us.

The Vice-Chair (Mr. David Price): Thank you.

Mr. Stoffer.

Mr. Peter Stoffer (Sackville—Musquodoboit Valley—Eastern Shore, NDP): Colonel MacDonald, thanks for appearing today. I think I see you on television as much as I do the newscasters themselves.

One of the difficulties I also see down the road as capital equipment becomes more expensive, is that we make very little of our own military equipment in this country. We're going to have to use our very low Canadian dollar to purchase either American, European, or any other country's military equipment or technology. You're indicating that you see a gradual decline in this. If our dollar doesn't improve over the next few years, that decline will just accelerate, isn't that correct?

• 1635

Col Brian MacDonald: To the extent that we are purchasing offshore, the answer is obviously yes.

In terms of defence procurement policy over the years, since the time of the Avro Arrow, I think, there has been the realization that we are unlikely to be successful in marketing major platforms. We have therefore focused on defence production sharing arrangements with the Americans. Under those arrangements, it has been understood that we would focus upon components that would be put into the pieces of equipment. This would provide a means of achieving this balance in the flow of dollars back and forth across the border. Simultaneously, as an industrial strategy, it would focus on the area of higher technology components, such that there might be the ability to have an industrial benefit taking place.

On balance, this strategy has worked reasonable well, but I agree entirely with you. With the decline in the Canadian dollar, this is going to present an extra strain, unless we can find some way of getting that dollar back up in its purchasing power ratio.

Mr. Peter Stoffer: In the discussions on specialization—that Canada can maybe concentrate its resources on specifics instead of a generality of military concerns—in your experience, is NATO capable of that type of discussion? Is it possible to get all the countries within NATO together to say Canada will do this, Holland will do that, Britain will do something, else, etc.? Is NATO capable of those types of conversations?

Col Brian MacDonald: This is a very difficult process. At the meeting of the Atlantic Treaty Association in Budapest last year, I delivered a paper in which I was looking at the prospect of transatlantic production sharing in the defence area. In that paper, I focused very much on the issue of the American lead in research and development, and then found a very interesting pattern. With the exception of France, most European states showed a clear preference for purchasing American equipment over purchasing it from other European states. This was simply driven by the basis of technological lead and the long production runs that lowered the unit cost of American equipment, such that the American alternative was a product that was a better product at a cheaper price. So this is a very interesting barrier to the idea of specialization in defence production. It may equally be a barrier to the idea of specializing in operations capabilities.

Mr. Peter Stoffer: Sir, let me go to one of the concerns we have in Atlantic Canada. I represent CFB Shearwater, which I'm sure you're familiar with. The other day, the company that makes the Cormorant came out with an ad in the Hill Times that basically... they're very concerned about the so-called “dumbing down” of the requirements for the new Sea King replacement. I handed you a document, but I don't know that you've had a chance to read it. I don't want to put you on the spot, but is the Sea King replacement being dumbed down for political reasons, in your opinion?

Col Brian MacDonald: Well, since I have not seen the actual document that the article refers to, I think it would be inappropriate for me to draw conclusions with respect to that.

I will simply say that like any of the people in the forces, I am very much disappointed at the slowness of the Sea King replacement process, because I certainly agree with the special joint committee that its “pull by” date was in 1995. We are now well beyond that. When it is eventually replaced, it will be almost a generation beyond the replacement point at which it should have been looked after.

Mr. Peter Stoffer: Sir, in the time left, can you elaborate a bit more on what you mentioned regarding alternate service delivery? In your opinion, sir, how many regular forces personnel should Canada have as of today, and how many should we have in terms of reservists?

As you know, the white paper stated we would have 60,000 regular troops and 30,000 reservists at the end of 1999. It's now 2001, and soon to be 2002, but we're nowhere near that line. In fact, the figure you get varies between 53,000 and 59,000, depending on who you're speaking to, and the number of reservists can be anywhere from 18,000 to 24,000. However, they indicated that we would have so many at the end of 1999. From your viewpoint, post-September 11, how many regular service troops should we have, and how many reservists should we have to meet our current needs?

And also comment on alternate service delivery, please.

• 1640

Col Brian MacDonald: To turn to alternate service delivery first, if we take the case of the flight training program that has been contracted to Bombardier, I viewed the development of that as a means of replacing the Tudor fleet with the BAE Hawk in a process using a contractor to effectively get it off the equipment budget and onto the contractor's side. The difficulty is that the contractor is not in business as a charitable organization. When the contractor buys the airplanes, the contractor has to run a depreciation schedule. If you are doing that, what you are effectively doing in the main defence budget is simply transferring capital acquisition from the capital program into the operations and maintenance program, because it is the O and M program that pays for flight training. I'm not sure you save anything. Indeed, as the Auditor General has remarked, there is a considerable question as to whether or not the savings are anywhere near what had been projected.

On the second question with respect to personnel strength, zeroing in on the militia, which is an area I look at from time to time, I am intrigued to notice that since the militia attrition rate is 35%, if you are going to maintain the militia at its current strength—whatever that strength is—you're going to have to recruit one-third of that strength each year. The announcement that the militia recruiting goal would be 3,000 annually therefore means the intended end strength is 9,000 personnel. This strikes me as being way below the minister's policy statement that seems to argue we should have a reserve of 18,500. If it is 18,500, then the recruiting goal for the militia should be doubled from 3,000 annually to 6,000, in my view.

The Vice-Chair (Mr. David Price): Mrs. Wayne.

Mrs. Elsie Wayne (Saint John, PC/DR): I welcome you here tonight, Colonel MacDonald. Thank you for taking time out of your busy schedule to be with us.

Our defence committee tabled a document last June, and it had unanimous support. In that document, we said Canada should have a shipbuilding procurement program. As you know, we have shipyards in Quebec—and one of their shipyards has now gone into bankruptcy—and in Saint John. We said we should have a shipbuilding policy whereby we build ships for our navy—just one at a time, not through a contract for eight frigates. The coast guard needs replacements. The supply vessels need to be replaced.

One of the men came to me just this past weekend and said that when he worked at the shipyard, the supply vessel HMCS Preserver would come in and the workers would clean the water filtration system before it went away. He said the filtration system apparently was not cleaned this time when the ship came in, so the men and women are over there with no water to wash their hands, to drink, and so on.

I'm wondering if you and other retired colonels have looked at the idea of Canada having a shipbuilding policy right here at home, whereby we build ships, have a navy shipyard, and make sure our men and women have the ships they should have in order to do the job. We never know when we're going to have another September 11. We never know when we're going to need to send our men and women off to some foreign land to do the work they're doing today. But we have to make sure they have the tools to do the job. We bought used submarines from London, England, and the bloody things wouldn't float. We're now paying $600 million to try to make them work, and they're not all working yet.

I'd like to know how you feel about that, sir.

Col Brian MacDonald: If I could perhaps expand the viewpoint that you have expressed to the broader concept of mobilization capability, we frequently talk about mobilization as though it were simply the mobilization of people. The problem is that if we are going into the prospect of a potential war, we are faced with the problem of equipment being destroyed and with a requirement to replace that equipment. In turn, this requires the existence of a defence production base that is capable of doing that.

• 1645

I would be very nervous about having us in the situation that we are in or are now moving toward: that in order to mobilize the navy, increase the navy, or replace the navy, we would first have to recreate the naval shipyard building capability. I would be very nervous about having that as our first mobilization requirement. As I'm sure you are well aware, if you take the pattern of Saint John Shipbuilding, it was not a question of waving a magic wand and having Saint John Shipbuilding come into existence within the period of a week. It was a process of having to go out to get people of skill, of having to import skills and training, to create that capability to manufacture ships. I would be much more comfortable if we had a building program that allowed us to maintain that industrial mobilization capability—and I would do that for the other services, as well as with respect to the navy.

Mrs. Elsie Wayne: I would say that when it comes to our shipyard right now—this is what bothers me tremendously, Colonel—Pierre Elliot Trudeau poured a lot of money into our shipyard and gave us the frigate contract, then Brian Mulroney poured many millions of dollars into it. We had the shipyard to build the ships with. We had the most modern shipyard anywhere in the world, along with its high technology. The workers were all trained, so do you know who came to get them? It was the people in the United States who have shipyards. They told us they were the best shipbuilders they have ever interviewed, so I think it's truly sad that we've allowed this to happen.

You mentioned $1.2 billion, including operating and capital expenditures. Are you saying that, in this budget coming up, we would need another billion for capital as well?

Col Brian MacDonald: Whatever increases are decided on in terms of the operations and maintenance component of the budget or in terms of the personnel component, I would argue for between $1 and $1.2 billion a year over and above that for the capital budget alone.

Mrs. Elsie Wayne: Thank you very much.

The Vice-Chair (Mr. David Price): Thank you, Elsie.

Now we'll go to the five-minute round, beginning with Ms. Gallant.

Ms. Cheryl Gallant (Renfrew—Nipissing—Pembroke, Canadian Alliance): Colonel, several reports this year have commented on the state of the Canadian Forces—such as the CDA report, the report of the Royal Canadian Military Institute, or the report from the Centre for Military and Strategic Studies at the University of Calgary—all suggesting that the Canadian Forces are in a crisis state. That is also the information this committee has heard from several witnesses over the last eight months. In your opinion, is it fair to say most independent observers now agree the Canadian Forces are in a crisis state?

Col Brian MacDonald: Certainly, in the strategic studies community, I would say that is the case. Another community that I interact with—that is, the peace research community—would take a different view, of course. But within the strategic studies community, I would argue that the consensus is the Canadian Forces are at a crisis point.

Ms. Cheryl Gallant: In your opinion, are we now or are we destined to be dependent on the United States for military protection?

Col Brian MacDonald: It is possible for us to fall into that “dependent” category. An alternative scenario, of course, is to simply drop any expeditionary capability whatsoever, including any deployment of peacekeeping forces, and to concentrate our resources simply on a homeland defence posture that would be devoted to the protection of vital points—such as the protection of our gas pipelines—that are quite vulnerable to terrorist attack and that sort of thing. Given that much American critical infrastructure is actually physically located in Canada, this would be a position the Americans might be capable of accepting, and they might then lessen their interest in moving into our area to protect their resources. I would be very disappointed if we were to simply withdraw from the rest of the world, to abandon our expeditionary capabilities, because I do not believe that's in the world's best interests, and I certainly don't believe it is in our best interests.

Ms. Cheryl Gallant: Can you comment on the army's state of readiness?

Col Brian MacDonald: The army's difficulty stems from the area of equipment. We have things like self-propelled howitzers, for example, that have hit the end of their date. The question then, of course, is how one replaces that necessary indirect fire capability.

• 1650

We have main battle tanks that are a generation older than contemporary main battle tanks. The question is what sort of vehicle is going to be required to replace them. Is it going to be another main battle tank that has severe strategic mobility implications, or is it going to be something along the lines of the medium armoured vehicle family the Americans are developing, and which works on the basis of a requirement to be able to deploy a brigade anywhere in the world within 96 hours and to have it rolling out ready to fight? This is not a heavy brigade, it is a medium-weight brigade that effectively upguns outfits such as 10th Mountain Division.

To some extent, this depends upon where the army is going in its concept of organization, its concept of operations, and the place it is has within the overall strategic posture of the country. But the army certainly is in a very severe state at this point. It is stretched just extraordinarily from the standpoint of its personnel, particularly in the service support trades, because they were the trades heavily cut as part of the process of instituting alternative service delivery.

Ms. Cheryl Gallant: Is a light battalion group like the 3rd Battalion, Princess Patricia's Canadian Light Infantry, suitable for operations in Afghanistan even though it has no armoured vehicles, no artillery, no heavy lift, and no attack helicopters?

Col Brian MacDonald: It depends on whether or not any peace in Afghanistan is of the classical type to keep. Under those circumstances, people have reached some sort of agreement. The deployment of lightly equipped peacekeepers is one in the classic mode of simply trying to avoid having a young private on one side take a shot at a young corporal on the other side to get the whole thing going again.

The 3rd Battalion is an excellently trained battalion, as all of our infantry battalions are, and I would argue that it is perfectly capable of handling a classical peacekeeping situation. But I would be very, very reluctant to see it deployed if it were in anything other than a classical peacekeeping situation, because I do not believe the scale of its weapons is adequate for dealing with the situation that is more capable of being described as peacemaking rather than peacekeeping.

The Vice-Chair (Mr. David Price): Mr. Wilfert.

Mr. Bryon Wilfert: Have you had an opportunity, Colonel, to review our plans and priorities recommendations to the department?

Col Brian MacDonald: No, I have not.

Mr. Bryon Wilfert: In that case, that'll cut down a couple of my questions.

Let me deal with one area that we're dealing with. This committee recommended that capital expenditures be a minimum of 23% of the department's budget, but that it not be at the expense of quality-of-life issues or of dropping or downsizing the current levels of the forces. First of all, could you comment on this suggestion that the capital expenditures be at least a minimum of 23% of the department's budget? And given that 23%, how would you prioritize the allocations?

Col Brian MacDonald: In the first instance, I would want to know what the size of the budget was, in order to calculate what the 23% was in dollar terms. I suspect I would go back to something in the order of about $2 billion to $2.4 billion as the required capital budget. If that then requires a larger overall budget, that would be my response.

On the second question on capital priorities, the problem is one of replacing existing capabilities and adding new capabilities. Certainly, the department has argued a requirement for the acquisition of strategic lift capabilities, both on the air side and the sea side. That would then allow for the deployment of the forces we put around the world.

I have a reservation with respect to the float logistics concept. I see the capabilities of those ships being able to deploy the initial force, but not the full brigade cited in the 1994 white paper. In order to deploy the full brigade, if one wanted to not be dependent upon the vagaries of being able to engage commercial shipping at short notice in an unusual period, then I would want to see a much greater sealift capability provided to us.

• 1655

Mr. Bryon Wilfert: One of the recommendations that we made to the department was that they provide the forces with strategic sealift, airlift, and air-to-air refuelling capabilities, essentially to fulfill our commitments in the 1994 white paper. The response of the department, particularly with regard to two of the five Canadian Forces Airbuses, was to look at this issue of strategic air-to-air refuelling, possibly joining this—if you're familiar with it—with the German Air Force project to modify the Airbuses. Could you comment on that approach?

Col Brian MacDonald: The department is juggling like mad to try to figure out some way to take a completely inadequate capital budget and cover short-term emergencies in terms of procurement. Sometimes this knocks out a planned sequence of purchases simply because an opportunity becomes available, such as the German program to refit the Airbuses. That allowed us to get in on that at a cheaper price than what we would have paid had we gone in some other direction.

Mr. Bryon Wilfert: Are you suggesting, though, that the type of approach in which we're able to maybe piggyback onto, in this case, the German project, is not a wise approach?

Col Brian MacDonald: I'm not suggesting it is not a wise approach. It is simply an approach driven by the attempt to find whatever savings one can, within the constraints of an inadequate capital budget, and sometimes getting out of the sequence one would employ if one had all of the resources one required.

Mr. Bryon Wilfert: The committee basically recommended at least $1 billion per year over the next three to five years in terms of an increase to the budget per se, while not suggesting where it should be allocated. If we go on that basis of $1 billion a year, do you think it's an adequate figure to address some of the issues you've outlined to this committee today?

Col Brian MacDonald: If that is $1 billion for the entirety of the budget, that figure is not adequate.

Mr. Bryon Wilfert: Again, what realistic figure would you be suggesting?

Col Brian MacDonald: I would be arguing for $1.2 to $1.3 billion in terms of the capital requirement alone. I would want to take a much closer look at the way in which we are managing our operations and maintenance part of the budget—to see what economies might be capable of being made—before agreeing to a particular increase.

One of the things that has impressed me in the last several years, particularly since Vice-Admiral Gary Garnett has been the Vice-Chief of Defence Staff, has been the greater transparency from his shop in terms of laying out the capital programs. I fully commend his initiative on this, because it helps all the people in the analytic community.

We need to go even further in this area of transparency in terms of looking at things and trying to find out how much it actually costs to produce the capability we are talking about. For example, are we able to say we're going to decide to make three or five or seven fighter squadrons, and to then say what it's going to cost us in terms of the replacement airplanes, in terms of the people, and in terms of the operations and maintenance, in order to produce that fighting capability? When we do that sort of process, we may decide it might make sense to change some of our other priorities within the entire system.

Mr. Bryon Wilfert: You answered my last question on transparency without me having to ask it. Thank you.

The Vice-Chair (Mr. David Price): Mr. Stoffer, for five minutes.

Mr. Peter Stoffer: Sir, I'm going to ask a question the committee has heard probably ad nauseam, about twenty or thirty times already.

An hon. member: It's on Shearwater, right?

Mr. Peter Stoffer: Exactly. It's on Shearwater.

In lieu of the situation of September 11, not only do we need increased capability and capital budgets to purchase the equipment we need, we also need the personnel. But we also need the infrastructure to house that infrastructure. As you know, Shearwater has been around for 83 years. You may not know it, but there's a capital divestiture program around Shearwater, with 1,100 acres of land going to the Canada Lands Company, more or less to get rid of it. My concern is that this will put pressure on the remaining lands in order to remove the Sea Kings or their replacements.

I have two questions. First, at this time, is it a good idea for the Canadian government to divest itself of any military infrastructure in lieu of September 11 or whatever else might come down the line? Second, based on your military experience, where do you think the Sea King replacements should be housed?

• 1700

Col Brian MacDonald: To take the second question first, my background is artillery, and therefore army, not navy. I'm reluctant to make any comment when I think a professional naval officer would really be a more appropriate person to provide that specific answer.

Coming back to the other issue in terms of whether or not we should be disposing of infrastructure resources before we have really gone through this process of determining where we are going to wind up, I am a bit reluctant to see that take place.

Interestingly, Martin Shadwick and I did a paper for the special joint committee of the Senate and the House of Commons, and we looked at a dimension of infrastructure changes. In that paper, we recommended the creation of a crown corporation to manage the real property of the department in order to get that property off the parliamentary appropriations, such that, for example, lands in Calgary that are being disposed could be sold and the money could be used to develop the other real property that the department has. This could be set up as a crown corporation, or possibly even as a joint operation with the potential for some involvement by the civilian sector. That might allow us to ensure that when we dispose of property, the financial reward coming from that flows back to the benefit of the department, rather than simply being returned to the Receiver General.

Mr. Peter Stoffer: Sir, do you think it's time to totally rewrite the 1994 white paper or to write a brand new one?

Col Brian MacDonald: Yes.

Mr. Peter Stoffer: Why is that?

Col Brian MacDonald: Simply, the world has changed radically since then.

The 1994 white paper was written within the frame of reference of the end of the Cold War. Presumptions and conclusions were drawn that were perfectly reasonable at the time. Since the end of the Cold War, we've seen a vast set of changes in the world not only in the geopolitical realities, but also in the area, for example, of the revolution in military technology that has seen profound changes taking place because of the shortening technology cycle.

The view originally was that air power by itself was inadequate in terms of winning a war, but the series of wars that we have seen—the Gulf War, the events in the former Yugoslavia, and certainly the events in Afghanistan—now suggest that air power is perhaps capable of doing a great deal more than we thought it was capable of doing through the 1989 timeframe.

Some of the analyses looking at what is going on in technology are factors that should be very high up in the strategic analysis process of creating a new defence white paper.

Mr. Peter Stoffer: This is my last question, Mr. Chairman.

Prior to September 11, the discussion about National Missile Defence was again brought forth by the President of the United States—something his father had tried and Ronald Reagan had tried with the so-called Star Wars plan. A lot of Canadians are very concerned that we would be coerced into that sort of agreement because of September 11. I would just like to get your views on this.

In the time we have remaining, should Canada join the United States in its proposal for National Missile Defence? If we do, wouldn't resources for the military be sucked into that sort of program, when nobody really even knows if it's going to work? Or should Canada be separate in that agreement or discussion?

Col Brian MacDonald: I share the view adopted by Dr. George Lindsey, the former chief of the Operational Research and Analysis Establishment. He feels that, at this point, the American focus is much more on theatre missile defence than it is on the strategic National Missile Defence, although the rhetoric certainly is there. The reason for this is that within the frame of the concept of asymmetric warfare, it's quite evident that nobody in the world can take on the Americans in a conventional war and do anything but lose handsomely. This has driven weaker states, such as the People's Republic of China, to think of the idea of using intermediate-range ballistic missiles with nuclear warheads as a means of holding the Americans at risk and at ransom. The American focus has therefore been on developing interceptors that are capable of dealing with intermediate-range missiles.

• 1705

Having said that, the required interceptor speeds are higher than those permitted under the side protocols of the ABM Treaty. In a sense, then, the real, practical focus of the Americans at this stage is far more directed toward theatre missile defence than it is toward ballistic missile defence. I have absolutely no difficulty whatsoever in supporting the American interest in theatre missile defence.

When it comes to strategic ballistic missile defence, I remain to be convinced that it is going to be cost-effective at the current state of technology. Having said that, having watched the way in which technology has changed in the last twenty years, I am not prepared to say it will never be cost-effective. At this stage, however, I'm still taking a watching brief with respect to the concept of ballistic missile defence.

The Vice-Chair (Mr. David Price): Thank you very much.

Mrs. Wayne.

Mrs. Elsie Wayne: I apologize for having left. This Hour Has 22 Minutes was doing a little skit with Elsie, so make sure you watch that next week. Don't miss it.

Some hon. members: Oh, oh!

Mrs. Elsie Wayne: Anyway, This Hour Has 22 Minutes doesn't come before the military with me. I have to tell you that.

In your opinion, Colonel MacDonald, what happened in Canada when it came to our military, our reserves, and so on? In the United States, the forces have always been a number one priority. It's the same thing in Great Britain, and the same thing in other parts of the world. How did we allow ours to slip the way they did? How did we allow the budgets to be cut? Is it that, in Canada, we wait until we have something like September 11 for some reason, and then people start screaming, hollering, and so on? Why did we do this to our military? What happened?

Col Brian MacDonald: The easy, first, shallow answer is that Canadian public opinion has not supported increased investment in the military over quite some number of years. But given that this is a shallow answer, you then have to proceed with the next question, which is, why is this the case? Quite frankly, I think a major factor was the decision made by the department in 1968 to withdraw from participation in the Canadian Officer Training Corps and University Naval Training Division programs in the universities. These were the programs that produced a great number of reserve officers and a great number of regular officers by having them located physically in the universities.

As a consequence of that decision, we have militarily withdrawn from the university campuses. We did this just at the time when the percentage of Canadians going on to university education vastly increased, and the number of young women going to university exploded. At that point, we effectively withdrew the military from contact with the people who would become the future professionals and managerial people of the country, the people who effectively govern the country.

In this, it is very interesting to draw a comparison to the Americans. The bulk of the officers in the American forces are not produced by the service academies of West Point, Annapolis, and Colorado Springs, but rather by the Reserve Officer Training Corps program located in the American universities. The impact of this is to ensure that the civilians, in their university formative years, come into contact with the people who are going to be the future leaders in the forces, accept them as being normal people, and accept the things they do as normal things. In the American system, a rubbing of shoulders occurs between the officer elite and the civilian professional-managerial elites. I think that is one of the key components of ensuring the degree of American support amongst the professional classes for an adequate military force.

When we look at what Canada did in 1968, I believe we disconnected from the people who are going to be the future elites of the country. That was a very bad move.

Mrs. Elsie Wayne: I agree with you totally. And this is the first time this subject has been brought up.

I brought it up because I see many young people out there today who seem to be lost. I keep saying to myself—and my husband says the same thing—that we could get them into the military. That's where they should be. My husband says the training in the military is superb, and the forces contribute to the whole economy and our way of life.

Colonel MacDonald, perhaps sometime in the very near future, you might do a little paper on what happened in 1968, because you see the difference.

• 1710

Mr. Chairman, I think we could use that information to increase the involvement of our military in the universities in the future. I think that is very important. It really is.

We've sent our men and women overseas, as you know, but we have not had our men and women from Edmonton go. I'm pleased they didn't have to go, but deep down inside, I honestly believe that when they were told they had 48 hours, we were waiting to make sure they were not going to be involved in anything other than humanitarian issues. I don't believe our men and women have the resources to do anything other than that.

Some of the peacekeepers who just came back were in touch with my office last week, Colonel MacDonald, and they said they felt embarrassed when they were overseas. They had to go to other groups of men and women representing other countries and ask them for resources, because our troops didn't have the resources they needed. That isn't what any one of us at this table wants, Colonel MacDonald. We want to make sure they have those resources.

When it comes to another paper over and above the 1994 white paper, I agree with you totally, sir, that it is time. It truly is. But I will say the defence committee that we have here has really been one group that has just about unanimously agreed that whatever we can do, we will do, and however our voices can be heard, we're going to make them heard for our military.

I thank you for being here, sir.

The Vice-Chair (Mr. David Price): Mr. Dromisky.

Mr. Stan Dromisky (Thunder Bay—Atikokan, Lib.): First of all, I have some general comments, and then I'll direct a question to Colonel MacDonald.

Thank you very much for coming, Colonel.

Some concern was expressed about sovereignty, and some statements were made. We have to remind people that it is not really a threat. We have been in partnership with our neighbours for many years. I can remember that, for several years, two big B-52 bombers flew over my house every single day for several years. They would go way up north, and then go back into the United States. It didn't make any difference with radar or with the American military there. I would like to point out that a multitude of partnerships exist right now between these two countries, and I can't envisage the military operating in complete isolation and alienation, without considering partnerships in a multitude of areas and functions.

If we strive to maintain all the functions of the military and the armed services of the past, we will end up with nothing. The military and this government, and governments of the future, will have to identify all those functions and prioritize them. As has been indicated already, we can become experts at some. We cannot become experts at every one of them.

In the future, if any traditional combat is involved, or if any traditional kind of combat involves an invasion of Canada, it's going to have to be some country like Puerto Rico, if you know what I mean. The only concept that I can envisage in the future would be some mega superpower that would have to attack North America. Of course, we could only survive in partnership with the United States.

We had a witness in the other day who indicated the same kind of philosophy, you might say, as I'm advocating right now—that we have to specialize and we have to put our resources into those specific functions in which we feel we can provide a very credible service to the international community, as well as to our own people.

• 1715

The witness stated that, as far as combat capability is concerned, the emphasis should be placed on and money should be placed chiefly in the air force and the navy, and not so much the army. He's talking about combat capability, saying army down, and navy and air force up. What would your reaction be to that?

Col Brian MacDonald: I would return to statements you made just a little bit prior to that, in terms of the need, under fixed financial constraints, to be able to develop a methodology of prioritization, of deciding which things are more important to us. This is the critical element. This is also an element that is beginning to be followed—and it certainly was beginning during Vice-Admiral Garnett's period—in terms of looking at the Strategy 2020 document and its capital implications not simply five years out, but twenty years out.

In a paper that I did at Carleton University about a year or so ago, I looked at the potential of the capital budget. I said that under what appeared to be the parameters then, we had about $40 billion in capital reaching out to the end of 2020. Based on traditional patterns of about a quarter of that being spent on bricks and mortar and on minor capital acquisitions, we effectively had about $30 billion to spend upon major platform renewal.

At that point, it would be awfully useful to have possible options put on the table, with the idea that this is an option and this is the price tag. For example, take the speculative figure that I used earlier. A squadron of JSF fighters is going to cost us $1 billion for hardware. We would then ask ourselves how this would work in terms of our twenty-year program in which we have $30 billion available to us—or whatever is available to us. I think that's a much more transparent process of looking at the options, what they're going to cost, and how much we have available to us. It's a process that might be useful in terms of the prioritization agenda that you are suggesting is appropriate, and which I agree with.

The Vice-Chair (Mr. David Price): Thank you very much.

Mr. Dromisky, I'm sorry—

Mr. Stan Dromisky: I believe a lot of people agree, but do you think that's really humanly possible from the political viewpoint? Do you that's really politically possible?

Col Brian MacDonald: I would hope so, but you're a much better gauge of what is politically possible than I am.

The Vice-Chair (Mr. David Price): Thank you again.

Mr. Benoit.

Mr. Leon Benoit: Colonel MacDonald, I really appreciate your input today. Your written document is extremely helpful, and I will be using it often in the future. It really is helpful to a member of the opposition. In the way our system works, it's really up to the opposition to try to push government into action in areas in which they don't really want to go.

I'm very pleased, too, to hear your support for another white paper, because I think it's really important that we define where the military's going before we jack up—hopefully—the expenditures on capital items and troop numbers. Before that happens, we'd better know where we're going, so I do appreciate that. Unfortunately, this committee, including Elsie, voted against a white paper when I brought a motion before it a week ago. She now supports it, though, so we're making progress. We'll eventually get it all the way around the table.

One thing I would like to say is that, earlier today, an individual on this committee asked how this government and past governments have allowed this decay in our military, particularly when it comes to equipment. I think it's partly because of the oversight that we have. Of course, we have oversight within the military, but they have to do what the political masters say, and things have become very politicized—far too much, I'd say—within the military. On the outside, the Auditor General does an occasional review, but it's not an annual review. It's not something that goes on continually.

Other countries have an inspector general who performs the task of monitoring operational readiness and what's going on within the different parts of the military. Those inspectors general have a lot of power. Really, an inspector general who also answers to Parliament in a very direct way... if we had an inspector general in Canada, that would really make the kind of decay we've seen in the military under this government and under previous governments much more difficult.

• 1720

I just want you to tell me if you would support the creation of the office of inspector general for the purposes of watching the rebuilding—I would hope—and ensuring that we don't allow this kind of decay in future, as well as making recommendations to Parliament in terms of what should be done in a broader way.

Col Brian MacDonald: I think the critical question in such a proposal would lie in the question of who this individual would report to. If the individual reports to Parliament in the fashion of the Auditor General, then he in effect functions as a quasi-officer of the House, and therefore has a very distinct, outside-the-system chain of command when it comes to reporting. If he is within the system and his reporting line is to the minister, as is the case with the ombudsman, then this is a very different reporting line and it constrains the individual in a different sense.

Of course within the department, there is the appointment of the Chief of Review Services, whose office arguably could be structured to exercise—and in fact arguably already exercises—a degree of this function within the department as it stands, but the reporting line of the Chief of Review Services, of course, is ultimately to the Chief of Defence Staff.

So there are a series of possibilities, but I would want to weigh the question of chain-of-command implications a bit more closely. I'd also want to be concerned that the individual has adequate resources to do whatever job he is tasked to do.

Mr. Leon Benoit: It's an extremely important position. In the countries that have the office of inspector general, I personally think it has proven to be extremely effective. I would argue that in every country that has it, it does report directly to the parliament, or to very powerful committees in the case of the United States.

In Canada, we also have this committee providing oversight. My concern, however, is that when we have people from within the department coming here, they're limited in what they can say. On the other hand, if we had an inspector general reporting to us, then when we did have the people from the military reporting to us, they would have to be very open—as compared to what they are now—because the inspector general would be reporting on what's happening in their areas as well. That would really increase the effectiveness of this committee as well. I think there would be a multi-track benefit from the creation of this office. But I do want to get to—

The Vice-Chair (Mr. David Price): Your time is up.

Mr. Leon Benoit: My time's up? Okay.

The Vice-Chair (Mr. David Price): If you want to comment on it, Colonel, I'll give you a minute.

Col Brian MacDonald: At this point, I'm not prepared to take a strong position with respect to the creation of the position of inspector general, but I would recommend that the process that has been instituted to increase the degree of transparency, particularly in the areas in which the Vice-Chief of Defence Staff operates, is something of very great benefit. In the set of university chairs funded by the ADM policy shop—the ones in the Security and Defence Forum area—I wish we had a few more chairs that were a bit more strongly focused and capable in the area of accounting-type analysis, of financial analysis. That's the sort of thing you find all the time south of the border, and it would be very helpful to the field here.

The Vice-Chair (Mr. David Price): Thank you.

Mr. Wood.

Mr. Bob Wood (Nipissing, Lib.): Colonel, you talked about homeland defence earlier. Because of the extra expenditures on homeland defence, do you think a lot of the funds we might need to enhance our traditional combat forces might be siphoned off?

Col Brian MacDonald: If the budget is not increased, the answer is yes.

Mr. Bob Wood: How much do you think it should be increased, if it doesn't? Does it go back to your $1.2 billion? Where does it go?

• 1725

Col Brian MacDonald: First of all, the office of the associate deputy minister for critical infrastructure protection has to be able to get through the tasks the office is already working on—trying to determine what critical infrastructure in Canada needs protection, and establishing a set of priorities for that. Once that is done, you can then begin to determine the nature of the size of the force that has to be available to deal with each of these items of critical infrastructure protection.

I did a paper at Carleton in March of this year in which I was looking at the issue of American critical infrastructure located in Canada. I observed that we supply approximately 28% of California's natural gas, while we supply 97% of the Pacific Northwest's natural gas. All that gas goes through two pipelines. A compressor station is located every 200 kilometres along those pipelines.

I created a thought experiment. Suppose Timothy McVeigh, instead of heading for Oklahoma City, had headed for one of those compressor stations and had blown it, taking out the compressor station and plunging the Pacific Northwest of the United States in the dark. What would then have been the impact of that? That leads to the question of what you have to do to defend that compressor station. In a sense, you could go to a Royal Engineer officer of 1800 and say it's no sweat. You simply put up an earthwork, dig a dry ditch, or create an approach that you can't get close to, and that would fix it. You then put a fifty-person company of that period in as the vital point guard.

That's the sort of analysis we're just beginning. Until we get to the end of that analysis, it's pretty difficult to say what the bill is going to be for homeland defence. But it's critical to get that process rolling.

Mr. Bob Wood: You said earlier that if you could only get $1.2 billion, you would have to look at other alternatives to save money to keep up the forces. Maybe I missed it, but were you thinking of alternative service delivery at the time?

Col Brian MacDonald: I would like to re-examine ASD, because I note the Auditor General's comments that the savings are not as great as they were expected to be. I also note the increased strain that is being felt by our logistics and engineering people in our peacekeeping activities. They were some of the folks who were downsized, and a number of their positions were effectively outsourced to ASD roles. I also notice that the ADS support structure in the Balkans—which has been put in place because we're so short of uniform guys—has turned out not to be a cost-saver, because when the ASD guy finishes an eight-hour shift, he goes on overtime, whereas the guy in uniform doesn't. So I really want—

Mr. Bob Wood: It's a lot like the Fort Frontenac experience, right?

Col Brian MacDonald: Yes.

Mr. Bob Wood: You've been around a long time. Do you see any other savings on ASD, other than... we're in Portage La Prairie and the Balkans, right?

Col Brian MacDonald: In the paper that Martin Shadwick and I did for the special joint committee, we looked at the question of whether or not the operation was one that conceivably could go to the field. Our view was that if it's going to go to the field in a combat operation, it should not be ASD. But if you had a training base that did not support, say, a brigade, then you could civilianize a number of the functions. But you sure can't civilianize the cooks in the brigade, because you have to go to the field with them.

Mr. Bob Wood: Do you think we'll be able to continue to make a contribution to international security in the next three or four years, just due to the fact our personnel are obviously just about exhausted from the operations they're in now?

Col Brian MacDonald: It's going to be increasingly difficult, particularly as we come to the 20-40 of people who enrolled at the last expansion of the Canadian Forces. They're coming up to twenty years' service and age 40, at which point they can retire with an immediate pension. I think we're going to see a real problem with the out-migration of people of that particular experience level. That is going to make it even more difficult, because many of these people are the experienced sergeants, warrant officers, and master warrant officers you simply can't do without. So I'm very concerned about the impact of that 20-40 out-migration that I predict will take place.

Mr. Bob Wood: Thank you.

The Vice-Chair (Mr. David Price): We have about two minutes left, so the chair is going to—

An hon. member: I'll take it.

The Vice-Chair (Mr. David Price): No, the chair's taking that time. Too late.

Colonel, you started off talking a bit about the tech cycles. That interests me very much. We'll take, for example, the maritime helicopter project. We look at the Sea Kings sitting out there now. In terms of major tech changes in their lifetime, there have probably been not much more than two or three at the max if we look at individual pieces of equipment in them.

• 1730

We're now looking at the new project coming up. With the speed of technology changes today, I can see the mission suites changing at a rather heavy pace. If I compare that with what's happening in other countries right now, quite often we see not much more than five years in, say, the States. The States rarely go more than five years now without changing a lot of complete mission systems in their major platforms. That's one reason why I thought separating the contract was a good idea in the maritime helicopters. I know a lot of people don't agree with it, but that was one of the reasons.

What are your feelings on that particularity? Do you see us doing mission changes because of equipment? Of course, the other thing is that when we were looking at the project, the original idea was to use modular units in order to be able to do exactly that—change equipment fast.

Col Brian MacDonald: To some extent, we're going to be driven in that direction simply because of the rate of technology change. When the CF-18s were bought, the standard PC was running an 8086 chip at that point, and the 286 chips were just coming in. The chips available for the on-board computers at that point were nothing much more than 286 chips. Something like this is a problem, of course, because it limits the speed at which your central computer can operate. If you now hang a much more sophisticated weapon on that airplane, suddenly the demands of that piece of equipment are such that they overload the capacity of the on-board computer, and you're driven to the replacement of the on-board computer. So, again, we're going to be forced more and more to try to look at this question of whether or not modular replacement is a possible way of getting around this.

The Vice-Chair (Mr. David Price): You bring up a really good example, because we can look at the interaction today between the AWACS and our planes operating with different speeds and different types of equipment.

I have just one other quick question. If we look at doing a new defence white paper, do we not have to look first at doing a foreign affairs review?

Col Brian MacDonald: At the period of the parallel foreign and defence papers that led to the defence white paper of 1994, it was a mistake to run them on parallel but not interconnected tracks. I would take the position that defence is one of the policy options that lies available to the foreign policy objectives of the country. Therefore, defence policy and foreign policy have to be considered simultaneously, not independently.

The Vice-Chair (Mr. David Price): Thank you very much, Colonel. We really appreciate it that you came before us, particularly on such short notice.

Some hon. members: Hear, hear.

The Vice-Chair (Mr. David Price): The meeting is adjourned.