Used Australian fighter jets could cost $1.1B: Parliamentary budget officer

Buying used Australian fighter jets to buttress the Royal Canadian Air Force is expected to cost taxpayers as much as $1.1 billion over the next dozen or more years, the Parliamentary Budget Office said Thursday.

Estimate for 18 planes is 22% higher than government's figures

A Royal Australian Air Force F/A-18F Super Hornet drops two flares as it performs during the T150 Defence Force Air Show on Oct. 15, 2016 in Townsville, Australia. (Ian Hitchcock/Getty Images)

Buying used Australian fighter jets to buttress the Royal Canadian Air Force is expected to cost taxpayers as much as $1.1 billion over the next dozen or more years, the Parliamentary Budget Office said Thursday.

That estimate, in a new analysis, is 22 per cent higher than figures presented by the Department of National Defence and will likely mean renewed criticism of the Liberal government's plan.

Parliamentary Budget Officer Yves Giroux looked at the cost of buying 18 old F-18s, modifying them to Canadian standards, operating them until at least 2032 and disposing of them.

The warplanes, which are of the same vintage as the air force's existing CF-18s, are expected to arrive in batches between now and 2022. The first two aircraft arrived recently.

DND planners estimated the cost would be up to $895.5 million.

The budget office figures it will be higher, running between $1.09 billion and $1.15 billion.

Giroux says the biggest difference between the two estimates relates to upgrading the fighters to Canadian standards.

Even still, he is puzzled by the disagreement. In preparing its estimate, the budget office used figures from the Department of National Defence and publicly available information.

"Why have they underestimated the cost? I wonder myself." Giroux told reporters after the report was presented.

"Given that they provided us with the basic information we used, I don't see why they would have missed the mark by 22 per cent."

'The magical trigger of $1 billion'

The answer, he suggested, may involve optics, because programs that slide in just under the $1 billion mark tend to generate less public controversy.

"The estimate we provided crosses the magical trigger of $1 billion life-cycle cost. They may have had an incentive to lower the cost estimate," Giroux said.

In a statement, National Defence said its cost was "extremely close to that of the PBO on the majority of line items," but they differed on figures for the upgrade, as well as the notion of whether extra funds — known as a contingency —  should be set aside.

The department insisted the cost of improving the Australian jets is still up in the air. "We are still producing options for these upgrades," said the statement.

Defence Minister Harjit Sajjan told the House of Commons defence committee that his department has provided the necessary information to the budget office and the public.

He said his department does "thorough costing."

Auditor general also challenged figures

Even still, the budget office is not the only one estimating that the program crack the billion-dollar mark.

Last fall, the auditor general also challenged DND's figures.

Michael Ferguson's last report estimated the purchase and operations cost would be roughly $1.02 billion.

Giroux, in his report Thursday, said the cost could go higher.

"The sensitivity analysis conducted within this report shows that prices could further change according to both project timelines and future flying-hour behaviour within the fleet," the report said.

The Liberals have long insisted the air force needs extra fighters because it cannot at the moment meet both its NATO and full-alert North American Aerospace Defence Command commitments at the same time.

The used F-18s are considered a stopgap until the federal government purchases 88 new fighters through a competition that has yet to get going.

The Conservative opposition have repeatedly said used fighter jets are a waste of time and money. 

"We shouldn't be surprised here, the Liberals have a tradition of buying old used equipment for the Canadian Armed Forces, all for political gain," said Conservative critic James Bezan, referring to the 1990s-era purchase of used submarines from the British. 

The latest report is not the first time the budget office has challenged National Defence over its fighter jet arithmetic. 

Almost eight years ago, the budget office questioned whether the estimated cost of acquiring the F-35 fighter, under the former Conservative government, was low-balled by defence planners.

The report led to the eventual unravelling of the federal government's plan to buy the stealth warplane.


Murray Brewster

Senior reporter, defence and security

Murray Brewster is senior defence writer for CBC News, based in Ottawa. He has covered the Canadian military and foreign policy from Parliament Hill for over a decade. Among other assignments, he spent a total of 15 months on the ground covering the Afghan war for The Canadian Press. Prior to that, he covered defence issues and politics for CP in Nova Scotia for 11 years and was bureau chief for Standard Broadcast News in Ottawa.


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