Is this government’s defence spending at unprecedented highs?

By John Geddes - Monday, June 25, 2012 at 6:10 PM - 0 Comments

Politicians so often make grandiose claims, and these are so rarely taken seriously, that testing them against facts might seem a low-yield exercise. Who, you might well ask, really cares? Yet I wonder if Conservative assertions about how no previous federal government has poured so much money into the Canadian Forces might be due for a corrective.

Immigration Minister Jason Kenney—such a key shaper of the Conservative message—boasted recently that “no government in the modern history of Canada has done more to invest in giving the equipment necessary to our men and women in uniform.” A government op-ed piece (under the triple byline of Defence Minister Peter MacKay, Associate Defence Minister Julian Fantino and Veterans Affairs Minister Steven Blaney) stated that the Tories have “increased our investment in our bravest Canadians…to unprecedented levels.”

Continue…

A question that won’t appear in Hansard

By Aaron Wherry - Thursday, June 7, 2012 at 9:34 AM - 0 Comments

The NDP pressed the government again yesterday afternoon to explain the limo tab of three ministers who attended the Davos conference last year. Peter Van Loan’s explanation is that the vehicles in question were selected after a “competitive” process. This explanation prompted a voice from the Liberal corner—belonging to Dominic LeBlanc, I believe—to yell a query at the Government House leader.

You had a competition for limos, but not for fighter jets?

The Commons: Jason Kenney again surveys the scope of history

By Aaron Wherry - Tuesday, June 5, 2012 at 6:18 PM - 0 Comments

Adrian Wyld/CP Images

“Mr. Speaker,” the Immigration Minister declared, “the reality is that no government in the modern history of Canada has done more to invest in giving the equipment necessary to our men and women in uniform.”

The general concept of “modern history” is said to describe all time since the end of the Middle Ages, or something like the last 500 years. In that sense, the governments that saw this country through the first and second world wars might quibble with Mr. Kenney’s presumption of peerlessness. If, on the other hand, Mr. Kenney meant something like “recent history,” he might be right. Of course, it might also be noted that none of this country’s other recent governments have spent so long at war.

“The government has consistently reacted to support our men and women in uniform, giving them the modern equipment that they need,” Mr. Kenney continued, “and at every step of the way, the NDP and Liberals have opposed our efforts.”

Mr. Kenney’s proclamations had actually been prompted by news that the government’s promised support for the troops was now deemed to be “unaffordable.” Continue…

No need to keep studying the F-35?

By Aaron Wherry - Tuesday, May 29, 2012 at 9:30 AM - 0 Comments

The work of the parliamentary committee studying the F-35 procurement is apparently done. At least so far as the Conservative members of the committee are concerned. Here was Conservative MP Andrew Saxton’s explanation yesterday.

Mr. Speaker, we have heard from the Auditor General three times: once for the report as a whole, once for the beginning of the chapter, and once at the end of the chapter. We have heard from senior government officials at two different sets of meetings that detailed the government’s response. We have heard from the Parliamentary Budget Officer to compare his numbers versus others. The purpose of the committee is to study the Auditor General’s report. We have done that. Let us get on with writing the report.

The public accounts committee met five times to consider the auditor general’s findings, though the first of those meetings was consumed by debating how to proceed with a study. David Pugliese suggests defence officials aren’t pleased with the latest turn of events.

At DND the talk is that the Conservatives have given the opposition MPs another PR windfall on the F-35 file. There has been widespread disbelief that the poor communications strategy has allowed the purchase to become a major political issue. This latest move will not help the situation at all, say NDHQ insiders.

Accountability and the F-35

By Aaron Wherry - Wednesday, April 4, 2012 at 9:33 AM - 0 Comments

Alan Williams, the former assistant deputy minister who has been raising concerns about the F-35 for months, talks to the CBC about where responsibility lies. Philippe Lagasse reviews the Auditor General’s report and the lessons that should be learned.

Once they had announced that the F-35 was Canada’s next fighter, moreover, Conservative ministers refused to question DND’s unsubstantiated estimates and figures until the aircraft’s widely reported cost overruns and technical difficulties could no longer be ignored.  Hence, although the Auditor General focuses on the errors and oversights of DND and PWGCS, it is evident that Conservative ministers failed in their responsibilities, too.

More to the point, no ministers should be permitted to avoid their constitutional responsibility for the affairs of the departments, no matter how much ignorance or inexperience they claim. Allowing ministers to shift their responsibility onto their departments or officials, however poorly they performed, would undermine the very bedrock of our system of responsible government.

John Geddes reviews the recent history of military procurement.

‘Obviously we have not signed a contract’

By Aaron Wherry - Friday, March 16, 2012 at 2:22 PM - 0 Comments

Stephen Harper, November 3, 2010.  We are going to need to replace the aircraft at the end of this decade, and the party opposite knows that. But instead, for the sake of getting the anti-military vote on the left, with the NDP and the Bloc, the Liberals are playing this game. The mistake is theirs. It would be a mistake to rip up this contract for our men and women in uniform as well as the aerospace industry.

Stephen Harper, today. Obviously at some point, the [CF-18] planes will reach the end of their useful life. At some point we will have to make a final decision, but obviously we have not signed a contract so that we can retain our flexibility in terms of ensuring the best deal for taxpayers.

Crusade?

By Aaron Wherry - Wednesday, November 9, 2011 at 10:30 AM - 15 Comments

Julian Fantino reassures Texas that the Harper government is committed to the F-35 program.

“We will purchase the F-35,” Fantino asserted. “We’re on record. We’re part of the crusade. We’re not backing down.”

Even setting aside the word‘s fraught history, “crusade” seems an odd term to apply here.

The Commons: The F-35 has as many explanations as problems

By Aaron Wherry - Monday, October 24, 2011 at 6:41 PM - 15 Comments

The Scene. “The F-35 saga continues,” Nycole Turmel declared by way of opening.

The latest twist in this epic tale of stealth flight involves the small matter of whether or not the expensive aircraft will be more or less useless when patrolling our vast northern frontier. ”We learned today that the aircraft will be delivered to Canada without adaptive equipment to allow communication in the Arctic. It’s really something,” the interim NDP leader exclaimed for the benefit of those who like their parliamentary invective relayed in the most folksy manner possible.

Peter Van Loan, the government House leader, duly stood here to wrap himself in the flag and throw himself around the troops. ”We are proposing to deliver to Canadian Forces the resources and equipment it needs to be able to protect Canadian sovereignty and security and to ensure that our defences are strong,” he explained. “The F-35 will have all the capabilities that are necessary to do so, including that primary critically important mission of ensuring our northern sovereignty is protected.”

This did little to assuage Ms. Turmel, who returned to her feet with a list of concerns. Continue…

Of jobs and jets

By Andrew Coyne - Wednesday, September 15, 2010 at 6:18 PM - 0 Comments

Minister of National Defence and Minister for the Atlantic Gateway Peter MacKay checks out the cockpit of the F-35. THE CANADIAN PRESS/Adrian Wyld

I’ll leave to others, at least for the moment, whether the F-35 contract makes sense in military terms: that is, whether this is the best expenditure of scarce defence funds. I remain to be persuaded either way. But  if the F-35 is so far superior to other planes as the government maintains, and if the benefits in defence terms are worth the extra dollars, then I think the contract can be defended, notwithstanding the absence of competitive bidders. You can’t have a competition for something that’s only made by one firm.

As I say, I’m keeping an open mind on its military merits. All I would suggest is that that is how any such purchase should be assessed — based on its costs and benefits in military terms, and not on the basis of its so-called “industrial benefits.” Indeed, that is the best thing about the contract as signed: it doesn’t have any “industrial benefits.”

That is, not as that phrase is used in procurement jargon: a requirement imposed on the contractor to set aside a certain portion of the subcontracting work for Canadian firms. Remarkably, the government has eschewed any such requirement in the deal — remarkable, both because defence contracts are usually riddled with such protectionist riders, and because this government has not previously shown much aversion to pork-barrelling.

Why are these a bad idea? The same reason as protectionism is generally. You don’t make yourself rich by paying too much for things, any more than you do by selling things for less than they cost to make — as in that other favourite tool of industrial interventionists, subsidies. “Buy low, sell high” is the recipe for prosperity, not “buy high, sell low.” The only reason to require a contractor to source from Canadian firms is if they would not do so willingly; the only reason they would not do so willingly is if the Canadian firms were not the most cost-effective option; and so the effect of such set-asides must be to inflate the cost of the contract. If the government were purchasing from these sub-contractors directly, that would be obvious enough. But it doesn’t change with the intervention of an American aerospace firm as the middle-man.

But what about all the extra economic activity so generated? If the government is going to spend all that money anyway, doesn’t it make sense to spend it in this country, creating jobs here rather than elsewhere? And won’t the extra taxes from all that additional output offset any extra costs?

The key to this enduring fallacy lies in those words “extra”, “additional.” The assumption is that productive resources are somehow called into existence by the government’s willingness to spend money on something. But that’s not the case. They are not created; they are diverted. The resources used to make parts for planes might have been used for other purposes. They are only diverted into aerospace by the availability of subsidy (in this case, the difference between the Canadian subcontractors’ costs and their foreign competitiors). Were there no subsidy, the same resources could be put to other uses, offering higher economic returns — and sending higher tax revenues back to the treasury.

How do I know they would offer higher economic returns? Because they don’t need a subsidy: that is, they offer a greater benefit to society, in terms of the price consumers are willing to pay for them at the margin, than they cost society to make, in terms of the resources they consume in production. Whereas subsidy only becomes necessary where the reverse is the case: where the costs to society exceed the returns. I say “society,” because that’s ultimately what’s involved. We may assign private title to these resourced, but ultimately they are society’s, in the sense that they must all come out of the same pot: one person’s use of a scarce resource leaves that much less for everyone else.

This is as true of labour as anything else. A widget firm is in the business of making widgets, not jobs. Jobs are not the product: they’re the cost. Likewise for military jets. The fundamental objective of the government should be to get the best jets for the lowest price — not to “create jobs.”

A final point. As I said off the top, I don’t know whether the jets are worth the price. Maybe the contract should have been put out to competitive tender. We’ll see. But it’s utterly incoherent of the Liberals to argue, on the one hand, that the government is paying too much for the jets (because of the lack of competitive bidders) and that it is not paying enough (because of the lack of domestic content quotas). Pick one!