While various ministers, including the Minister of National Defence, Peter MacKay, have said they accept the Auditor-General’s directive that all costs should be included, they have also derided it as at best a wholly “new way of doing business,” and a strange one at that. The same homely analogy to buying a car has been raised, repeatedly, as if to suggest how ridiculous it would be to add up all the costs of a car over its expected life beforehand.
The government, and the Minister of Defence in particular, has maintained this position, notwithstanding long-established Treasury Board policy requiring, in line with the Auditor-General, that the cost of assets be stated in “life cycle” terms, that is including “all relevant costs over the useful life of the acquisition.” It has done so, what is more, in defiance of its own internal accounting, as documented both by the Auditor-General and in news reports from 2010, in which the missing $10-billion is included. That is to say, the government kept two sets of books on the project, one for private purposes showing the cost as $25-billion, the other for public purposes putting it at $15-billion, yet still maintains it had no intent to deceive: that it was just a difference of opinion, a dispute about accounting.
Now, it is possible that a minister could be so ill-briefed that he would never have heard of “life cycle costing,” though the concept has been around for decades; that he would not know it was the standard, not only at Treasury Board, but across NATO. And I suppose it is possible for a government to be so confused that it would both apply and not apply the concept at the same time, particularly if it was unclear that this was something that was required of it, rather than simply good practice.
But it is not possible to believe this, once you understand that in fact there is no difference of opinion: that the policy of accounting for all the lifetime costs of an asset, without exception, is not some crazy invention of the Auditor-General’s, or some musty Treasury Board guideline. It is the publicly stated policy of the Department of National Defence — the department of which, if memory serves, MacKay is the minister. The policy the minister sees fit to ridicule is, according to conventional constitutional doctrine, his policy.
How do I know this? From a reading of another Auditor-General’s report, this one from the fall of 2010, dealing with another military procurement deal: the purchase of 43 Cyclone and Chinook helicopters to replace the notorious Sea Kings. (The Auditor-General at that time was Sheila Fraser, of sponsorships fame.)
The report makes familiar reading. Many of the same issues raised by the department’s handling of the F-35 deal are here: the same overstating of benefits, the same understating of risks, the same failure to document claims throughout. And among the Auditor-General’s complaints, again, is the failure to properly count the costs.
“We found that National Defence has been slow to assess the full life-cycle costs,” she reported with regard to the Cyclones, “and some elements of these costs have still not been completely determined.” She listed some of the costs that had not been included, that should have been: “costs related to contracted Sea King support, new infrastructure, Canadian Forces personnel, and ongoing operating costs.” Similar deficiencies were found with respect to the costing of the Chinooks.
Her recommendation: “National Defence should start estimating full life-cycle costs in the options analysis phase of its project management process and present these costs to decision makers at subsequent steps in the process as the estimates evolve.”
And the Department’s response? “Agreed.” Well, there’s more: “National Defence follows well-established processes for progressively developing and refining full life-cycle cost estimates… National Defence continuously seeks to improve its cost estimates and, in response to this audit, will initiate a further review… etc. etc.” You can read the whole thing here [PDF]. But the gist of it is in that first word: Agreed.
So there is no disagreement here: no dispute, no confusion, no mistake. In the fall of 2010, Peter MacKay was Minister of Defence. It is inconceivable that he could be unaware of his own department’s position on this major issue: that all costs should be included, including operating costs, including personnel, as the Auditor-General had recommended. Note that her report did not exclude any costs on the grounds that this was “money we’re already spending” on the asset to be replaced, an exception MacKay has tried to carve out.
And once that claim is knocked down — that this was all just a dispute over accounting — there is no escape. The government knowingly misrepresented the true costs of the F-35 in its public statements. It knew how it was supposed to account for these, under Treasury Board rules, under the Auditor-General’s recommendation, and by its own publicly stated agreement with both. And it knew how it was doing so in its own internal documents, going back to 2010. It simply chose to tell a different story to Parliament and the public.
This isn’t some campaign slip of the lip, or the usual political weasel words, of a kind we have sadly learned to mistrust. This isn’t even a case of ministers misleading Parliament, which used to be a resigning offence. This is a government document, on a straightforward question of fact: the kind we expect we can believe. And not on some minor matter, but on an issue of the highest controversy, just before an election — an election that was in part triggered by the government’s refusal to provide documentation for these figures.
This isn’t about the planes, in other words, or costs, or accounting. This is about accountability. This is is about whether departments are answerable to their ministers, and whether ministers are answerable to Parliament — or whether billions of public dollars can be appropriated without the informed consent of either Parliament or the public. It is about whether ministers speak for their departments, or can disown them when it suits them. And it is about whether we, as citizens, are prepared to pay attention, and hold people in power to account when they lie to us.
Which is to say, it is about whether we live in a functioning Parliamentary democracy, or want to.
Original Article
Source: national post
Author: Andrew Coyne
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