By Scott Taylor
Over the Christmas holiday there were three Ottawa Citizen reports on defence procurement projects. The net sum takeaway from these articles was an appreciation for just how much money the government is spending in return for almost nothing tangible in terms of increased defence capability.
The first story noted that Canada has already spent $4.8 billion on new warships, the construction of which will not even begin until 2024.
The genesis for the news story was the latest figures presented to the House of Commons detailing the spending so far on the Canadian Surface Combatant (CSC) project.
For those Canadians unfamiliar with this program, it is high time that you took note.
With the Parliamentary budget officer estimating the total cost to exceed $300 billion, the CSC acquisition is the largest federal purchase in history.
While that sum includes the life cycle cost of operating the 15 new warships, the estimate for the construction of these ships has already skyrocketed from an original $26 billion to the currently estimate of $84.5 billion.
That amounts to roughly $5.6 billion to build each of the 15 new 7,000 tonne frigates.
Although I will be accused of comparing oranges to pumpkins, the British Royal Navy recently completed the construction of HMS Queen Elizabeth, their new 65,000 tonne aircraft carrier, at a cost of just $4.5 billion (CAD).
While we are comparing the ‘bang for the buck’ that Canada’s receives in comparison to our allies, the Citizen’s second report was entitled “Analysis: Canada’s price tag for F-35 jets raising questions.”
The cornerstone of this article was the announcement that Treasury Board had approved the spending of $7 billion for the purchase of 16 F-35 Joint Strike Fighter Jets.
In March 2022, the Liberal government announced that Canada would acquire a total of 88 F-35’s to replace the RCAF’s aging fleet of CF18 fighters. That project is expected to cost between $15 billion to $19 billion for the aircraft acquisition, with a total life cycle cost of $77 billion.
However, this initial purchase contract worth $7 billion for the 16 F-35’s has raised some eyebrows among military procurement specialists. Even if you factor in the fact that this initial price tag includes spare parts and the construction of new hangars, the unit price is significantly steeper than what allied nations are paying for the same aircraft.
For instance, Switzerland just placed an order for 36 F-35’s at a cost of $8.5 billion (CAD). That works out to roughly $236 million per plane.
Finland ordered 64 F-35’s for the equivalent of $15 billion (CAD), or approximately $234 million per fighter. Germany’s purchased order for 35 F-35’s will set back German taxpayers $12 billion (CAD) which equates to $340 million per plane.
In all of those purchases, the individual deals do include provision for related systems and training. That said, Canada’s first batch of F-35’s works out to a comparatively expensive $438 million per jet.
The third Citizen report was headlined ‘Cost of new Arctic Patrol Ships jumps by $780 million.”
Once again, for those who closely follow such major defence procurement projects, it is not news that the Arctic Offshore Patrol Ship (AOPS) project has been plagued with delays and cost increases from the outset.
In January, 2015 the federal government awarded Irving Shipbuilding a $2.6 billion contract to build five AOPS. In 2018, that deal was expanded to include a sixth ship for the RCN. However by 2021, those initial cost estimates had increased to $4.3 billion, and the most recent figures have risen to $4.98 billion.
The reason given for the latest price hike is the extra costs associated with the additional safety protocols as a result of the COVID-19 pandemic. Also cited for the extra cost was increased transportation costs and increased expenses for labour.
Fair enough.
However, taxpayers should also take note of what exactly Canada’s Navy is receiving in return for $4.98 billion. Back in 2017, the Senate Defence Committee questioned the purchase of the AOPS. Their report stated “This (concern) is based on the fact that these ships cannot operate in ice more than a metre thick, are slower than a BC Ferry, can only operate in the Arctic from June to October and will require a Coast Guard escort in northern waters.”
As a result of their findings, the senators concluded “These limitations are troubling and raise the question of whether the taxpayers are receiving value for the monies spent.”
Let me answer that question, in a single word, ‘No’.
