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Kevin Page says defence purchasing 'broken' and 'wrong'

By Meagan Fitzpatrick , CBC News Posted: May 03, 2012 8:41 AM ET Last Updated: May 03, 2012 9:12 PM ET Parliamentary budget officer Kevin Page told the public accounts committee Thursday morning that he received only partial information from the Department of National Defence when he prepared his report on F-35 costs in 2011. (Sean Kilpatrick/Canadian Press) F-35 costs low-balled: budget officer 13:03 Public misled on F-35 costs? 11:01



Parliamentary budget officer Kevin Page says National Defence's process to buy equipment is broken if the way it handled the F-35 fighter jet program is normal.

In an interview with Evan Solomon, host of CBC's Power & Politics, Page pointed to committee testimony by top department officials who said the way they handled the process to buy the F-35 is the way they usually do it.

If that process is normal, Page said, then it's "broken. Completely broken. And wrong."

Officials gave one estimate to cabinet, he said, that included the full costs of the plane for the complete lifespan, but gave another estimate to MPs.

"To tell Parliament, effectively, to tell Canadians, that, well, actually it's a much smaller number, that's wrong," Page said.

Earlier in the day, Page testified at a committee that National Defence withheld information when he was preparing his controversial report on the costs of the F-35s, and he later indicated he thinks Canadians were misled about the true costs of buying the fighter jets.

Opposition MPs, including interim Liberal Leader Bob Rae, reacted to testimony from Page and other officials at the public accounts committee meeting by saying the government "lied" to the Canadian people about the F-35 costs and didn't share its own internal cost estimates with the public.

During his hour of testimony, Page told MPs he has now learned in the wake of Auditor General Michael Ferguson's report released in April that his office didn't get all the information it asked DND for when he was trying to calculate the full life cycle costs of the planes the government is considering buying to replace the CF-18 fleet. Page's report was done in response to  a request from the Commons finance committee.

When asked why he didn't get everything he asked for, Page responded, "We don’t know the reason for that."

"We also asked for information on their methodology and did not receive it," Page said.

Public should be given same numbers as cabinet

Conservative MP Chris Alexander, parliamentary secretary to Defence Minister Peter MacKay, had a tense exchange with Page during the meeting when he challenged the budget officer to explain why he calculated costs over 30 years while DND uses a 20-year cycle.

"I see actually no logic as a budget officer to use 20 years when we know that the real life cycle is going to be 30 years, potentially more," Page said, adding that the CF-18 life cycle is turning out to be around 40 years.

Just because the government has used the 20-year estimate for decades doesn't mean it's right, Page said.

Alexander suggested Page should be using the same time period as DND, since it is the department buying the plane, but Page shot back that taxpayers are the ones picking up the tab and that it is his job to provide independent analysis of government spending.

When he spoke to reporters after his testimony, Page was asked about comments he made on CBC's The House on Saturday when he said it looked as if the government kept two sets of books for F-35 estimates — one for internal use and one for the public.

Ferguson's report showed that cabinet was told in 2010 the planes would cost $25 billion. But in response to Page's report in March 2011, DND said the price tag was $15 billion. The difference in numbers is what has prompted opposition MPs to accuse the government of hiding the true costs of buying the planes.

"I don't think we should be providing different numbers," Page said Thursday. It would enhance trust in Parliament if the same numbers that were given to cabinet were given to the public, he said.

When asked if the government wanted Canadians to think the planes would cost less than was internally estimated, Page said yes.

NDP MP Malcolm Allen said after the meeting that Prime Minister Stephen Harper and MacKay both chose to communicate the lower number to Canadians.

"They tried to minimize the cost, to make it look as if it was a better program and a cheaper program than it was. Mr. Page is absolutely correct," he said.

'They lied to the people of Canada'

Rae, who doesn't normally sit on the public accounts committee, said Harper and his government also chose to attack Page and the opposition when they said the figure must be higher than the $15 billion instead of revealing its $25-billion estimate.

"They lied to the people of Canada before the election and they lied to them during the election about the real cost of the plane," said Rae.

Harper did "not tell the people of Canada the truth that he knew about the potential cost of this project," according to Rae.

In his opening statement, Page said he wanted to make it clear that his office did take operating costs into account when it calculated that the full life cycle costs for 65 F-35s would be close to $30 billion. DND officials testified earlier in the week that they didn't think his report included operating costs when the department responded to it and gave its $15-billion figure.

Page also said that his office understood it had been given all relevant information on the life cycle costs from DND, as per the request from the finance committee, but that "it has since become evident that the government's public figures did not include components of full life cycle costs" as required by the motion.

The budget officer also told MPs that the figures in Ferguson's report, confirmed by DND and its minister, MacKay, bring DND's estimates for full life cycle costs in line with his own.

Deputy ministers testify again

Page appeared at the committee for one hour, ahead of the same department officials who testified on Tuesday and who were back for a second time.

On Tuesday, the deputy minister of the Department of National Defence, Robert Fonberg, and other DND officials criticized the methodology Page used in his report. That report sparked controversy because Page's estimates for buying 65 fighter jets from Lockheed Martin as part of the U.S.-led Joint Strike Fighter program were more than double the government's estimates.

Fonberg was asked Thursday to respond to Page's statements earlier in the morning and he told MPs he stands by his belief that the PBO did not include operating costs in his calculations. He said DND has found no evidence that he did and that Page has been asked for clarification but hasn't provided it yet.

He also told the committee that he's unsure why Page drew the conclusion that he only received partial information from DND.

"To the best of my knowledge we fully responded to the PBO's request," Fonberg said.

Michelle d'Auray, secretary of the Treasury Board, told the committee that when her department considers requests from the government to buy new assets, it uses a 20-year time frame for estimated costs in order to make a decision.

Treasury Board has not received an approval request for the funds to buy the F-35, she said.

François Guimont, deputy minister of public works and government services, again expressed his confidence in the new secretariat that is being set up in response to Ferguson's findings to oversee the purchase of a new fleet of planes. The government said that DND would continue to evaluate options for replacing the CF-18s but at the same time it named the new oversight body the F-35 Secretariat, which opposition MPs said made it clear the government is intent on buying the Lockeed Martin model.

Public Works and Government Services Minister Rona Ambrose confirmed on Wednesday that the government has now dropped "F-35" from the group's name.

Lt-Gen. André Deschamps, who on Tuesday said the air force is preparing to acquire F-35s, told MPs that when DND was analyzing options for new planes it looked at what technology is needed to respond to future threats. He said those threats include the proliferation of advanced surface-to-air missile systems in some countries, he didn't name which ones, and said today's aircraft aren't well-equipped to respond to the "deadly" systems.

Read Kady O'Malley's live blog. Mobile-friendly feed here.

With files from CBC's Laura Payton






