F-35 purchase had 2 sets of books, Page says

Canada's budget watchdog says it appears the Conservative government kept two sets of books when it came to the costs of replacing Canada's aging fleet of CF-18s and that Canada won't be able to purchase 65 F-35s, but more like 40 or 45 stealth fighter jets.

Conservative MP Rajotte denies government did anything wrong in jet procurement process

Parliamentary budget officer Kevin Page says his office 'didn't do any victory laps' when the auditor general's report found that the costs of acquiring 65 F-35s over 20 years was closer to Page's $29-billion figure than the government's public cost estimates. (Adrian Wyld/Canadian Press)

Canada's budget watchdog says it appears the Conservative government kept two sets of books when it came to the costs of replacing Canada's aging fleet of CF-18s with 65 F-35 stealth fighter jets. 

In an interview airing on CBC Radio's The House on Saturday, parliamentary budget officer Kevin Page spoke out on the issue for the first time since Auditor General Michael Ferguson delivered a report earlier this month lambasting the government and Department of National Defence officials over estimated costs of replacing Canada's fighter jets.

Page told host Evan Solomon what bothered his office was that one set of books was available inside DND, while another "for communication purposes" was presented publicly, in which he said the government was "low-balling" the numbers.

"You do get the sense there were different books being kept," he told Solomon. 

In his report, Ferguson found that the costs of acquiring 65 F-35s over 20 years was closer to $25-billion, and not the $15-billion the public had been told.

Ferguson's findings supported Page's estimates of $29-billion over 30 years tabled by the spending watchdog in March 2011, a figure for which Page was heavily criticised at the time.

When asked by Solomon whether he felt vindicated by the auditor general's findings, Page answered that his office "didn't do any victory laps."

"We are doing our jobs," said Page, who was appointed by Stephen Harper in 2008 to a four-year term, which ends next year.

In an interview also airing on The House Saturday, Conservative MP James Rajotte denied the government did anything wrong.

"From my own personal point of view, we have to separate the costs between acquisition, maintenance and operation," said Rajotte.

Life-cycle costs

Rajotte, a Conservative MP who also serves as Chair of the Commons finance committee, attributes the different estimates between DND, the auditor general and the PBO in part to the fact they were "using different time periods."

"Also, it is very challenging to estimate what the operational costs of an F-35 are going to be 30 or 40 years from now," added Rajotte.

Testifying before a Commons public accounts committee on Thursday, the auditor general said "significant" items were missing from the government's estimates of the F-35s, and that cabinet would have approved the $25-billion estimate in its budget in 2008.

"What we identified was there were some significant things missing from the life-cycle costs," Ferguson told MPs on the committee.

The auditor general pointed to attrition, upgrades and the fact that these aircraft "were going to last for 36 years, not 20 years."

F-35 pricetag to soar

Page, who is now busy preparing new estimates on the full costs of acquiring F-35s, also told Solomon the pricetag could go well beyond the $25-billion estimated once the life-cycle costs are factored in.

Until now, the government has estimated the cost of each F-35 plane at $75 million. But according to Page, the government need only look south for a more "reasonable" estimate.

According to Page, the U.S. Government Accountability Office (GAO) has pegged the costs for all variants of the F-35 at $137-million.

And at that price, Page says the Canadian government will not be able to purchase 65 F-35s but more like 40 or 45 fighter jets.

"That's the difficult part," said Page.

"If we spend more on these planes, what does this mean for ships, what does this mean for the armed forces, and what does this mean for Defence Department sustainability going forward, which could be a huge issue?"

Page wrote to Rob Fonberg, the deputy minister of national defence, this week asking him to adopt the same pricing used by the GAO.

"We're already encouraging (DND) officials to look at the numbers coming out of the U.S.," said Page, adding his upcoming estimates would certainly "borrow on that."

"Prices are important. Costs are important."

Rajotte said the government has accepted the auditor general's findings, and that's why it is changing the process going forward.

The changes include establishing a new secretariat under the purview of Public Works and Government Services to oversee the process of replacing Canada's aging CF-18s.