The News Rundown

Budget officer says used Australian fighter jets will cost Canada over $1 billion — far more than DND claimed

The purchase of used Australian jets to boost Canada’s current fleet of fighter planes could cost taxpayers more than $1 billion, a figure 22-per-cent higher than the Department of National Defence is claiming, according to a new report from parliament’s financial watchdog.
Parliamentary Budget Officer Yves Giroux examined the cost of buying and upgrading 18 used Australian F-18s and flying them to 2032. His report, released Wednesday, puts the final price tag at between $1.09 billion and $1.15 billion — considerably more than the $895.5 million estimate from DND.
Giroux said: “We considered the entire life-cycle cost, from project management up until the very end of the disposal phase. We didn’t look at whether it was a good deal.”
The PBO’s costing included weapons, upgrades needed for the aircraft, annual maintenance fees and the fuel that would be needed over the years of flying the aircraft.
The Royal Canadian Air Force is using the jets as interim fighters to boost the capability of the current fleet of CF-18s until the purchase of a new generation of aircraft. The RCAF will fly 18 of the Australian jets and use the other seven for parts and testing.
The RCAF received its first two used Australian fighter jets at 4 Wing Cold Lake in Alta. on Feb. 16. Deliveries of the jets will continue at regular intervals for the next three years, and the aircraft will be integrated into the aging CF-18 fleet as modifications are completed, according to the RCAF. The last aircraft are expected to arrive by the end of 2021 and fly until 2032.
Originally, the air force was meant to get new F35s from US company Lockheed-Martin. That's what Nato allies are using. The US uses F35s. Australia is going to be upgrading to the F35s as more of their old CF-18s are sold to Canada.
Canada was originally going to get F35s as well, being the Conservatives plane of choice. The Liberal failures stemmed from their absurd campaign promise during the 2015 election to proceed with a fighter replacement process that was fair and transparent, but which also excluded the Conservatives’ preferred Lockheed Martin F-35, an advanced American stealth jet now entering service with several allied nations. It was instantly obvious that the Liberal proposal was inherently contradictory: you can’t hold a fair competition while excluding a clear front-runner. Trapped from the outset, the Liberals have been trying to find a way out ever since. Instead the Liberals chose to ignore the F-35 and deal with Boeing's Super Hornets instead.
But the failure of the Liberals to negotiate with US president Donald Trump gave Boeing leverage to complain to the US president about subsidies that Quebec based competitor Bombardier gets from the Canadian government.
In 2017 Boeing complained to the U.S. Commerce Department that Canadian subsidies for Bombardier allowed it to sell its C-series civilian passenger aircraft in the U.S. at cut-rate prices. As a result, the administration of U.S. President Donald Trump enacted a tariff of almost 300 per cent against the Bombardier aircraft sold in the U.S. In retaliation, Canada cancelled the deal to buy the 18 Super Hornets from Boeing, which would have cost more than US $5 billion.
Canada standing up for Bombardier and causing a tariff war with the US made it untenable for Canada to upgrade their airforce to modern standards,
In November 2018 the Auditor General’s office issued a report noting that the purchase of the extra aircraft would not fix the fundamental weaknesses with the CF-18 fleet which is the aircraft’s declining combat capability and a shortage of pilots and maintenance personnel.
The report said: “The Australian F/A-18s will need modifications and upgrades to allow them to fly until 2032. These modifications will bring the F/A-18s to the same level as the CF-18s but will not improve the CF-18’s combat capability.”
Canada has been wanting to upgrade its combat jets for quite some time. In 2010 the Harper government announced it would acquire 65 of the planes for $9 billion, with a total project cost of $16 billion.
Instead, we're using repurposed old technology, and costs for that are rising as well. On top of that, Canada is forced into paying for development of the F35s, even though we aren't even getting any!
Canada is one of nine partner countries in the F-35 project, each of which is required to cover a portion of the stealth fighter's multibillion-dollar development costs to stay at the table.
Each country pays based on the number of F-35s it's expecting to buy. Canada has pitched in more than half-a-billion dollars over the last 20 years, including $54 million last year.
It's been noted that Canada is a country cursed with a long history of utterly catastrophic military procurement failures. The multi-decade Sea King helicopter replacement escapade springs immediately to mind (and it will endure for at least a few weeks longer before the last Sea King is retired). As does the disastrous purchase of rusted-out British submarines to replace Canada’s elderly sub-surface fleet; only in recent years has that 1990s-era procurement actually begun producing functioning warships. The pathetic end of service for our last two supply ships, retired without replacement because they were simply unsafe to operate any longer at their advanced age, must surely also make the list.
But even against that history of spectacular disgrace, the Liberal government’s handling of the Royal Canadian Air Force’s CF-18 fighter jet replacement still stands out as an especially shameful display. Although it’s too soon to say for certain, future historians may well come to regard this slow-motion train wreck as the defining Canadian military procurement embarrassment.
The core problem is easy enough to grasp: Canada’s fleet of CF-18 jets is approaching 40 years of age, double its intended service life. The basic design is a few years older than that. The jets have been well maintained and periodically upgraded, and remain effective weapons. But there is only so much life that can be squeezed from such a high-performance machine before it simply becomes dangerous to expect any more from them. There is a real risk that they could actually start falling apart, even in mid-air, if pushed much longer and harder than they have been already. The only solution is new jets, and those jets will cost a lot of money, something no Canadian politician has much appetite for. But there is no way around this. And considering the long delivery time for such aircraft, the clock is very much ticking.
Supplementals:

No budget before spring election, government hints in Q3 fiscal update

Finance Minister delivered his fiscal update this Wednesday. What are fiscal updates?
In this we learnt that Alberta will finish the year with a $6.9b deficit.
The government also chose to highlight a “path to balance” by 2023–24.
The fact that a “path to balance” is mentioned is a likely indicator that there will be no budget before the election. A fiscal update has never included a path to balance before.
Revenues were up $1.8b, Bitumen royalties were $1.6b higher than expected, and the government collected $750m more in personal income taxes.
Operating expenses were $221m more than forecast.
Other notable spending highlights included $30m on advocacy for the Trans Mountain Pipeline and Justice spent $34m more than expected due to increases to legal aid, victims of crime, and the rural crime reduction strategy.
This update also came the same day that the Conference Board of Canada predicted weaker growth for Alberta in 2019. Slowing to 1.3%.
Alberta also has the lowest growth rate of any province just behind New Brunswick.
The government even agrees with this, pegging 2019 growth at 1.6%.
The current provincial debt has also risen to $58.6b.
Who has the highest unemployment rate? The Atlantic provinces. But right after that? Alberta, going past every other province.
Our employment rate currently stands at 6.8% while the national is 5.9%. The best is in BC at 4.6%.
Calgary’s resides at 7.3% and Edmonton at 6.6%.
And it’s not just a wane in oil, oil producing states south of the border are doing great. North Dakota has an unemployment rate of 2.7%. Oklahoma 3.2%, Utah 3.2%, Texas 3.7%.
This has become the new normal so much so that the media isn’t reporting these huge contrasts.
It is time for change.
Supplementals:

In the BC Legislature last week, the NDP brought in their spring budget. In it there was lots of spending, but curiously absent was the promised $400 renter's rebate that the NDP campaigned on as a way to provide relief for many low income renters living in the outrageous housing markets that is Victoria Vancouver and Kelowna, among others.
Finance Minister Carole James says that the NDP has not abandoned the renter rebate, saying that they are "continuing to work" on it, but the NDP are now entering their 3 year in government, and there has been no sign of it.
Last year, the BC NDP made it more difficult for renters to afford their homes, in approving a rent increase cap of 4.5 per cent next year, which is inflation plus two per cent.
The average rent for a two-bedroom apartment in Metro Vancouver, according to the Canada Mortgage and Housing Corp. rent report from November 2017, was $1,860 but empty units were going for $2,100. But padmapper.com puts the average rent for two-bedroom apartments at $3,400 and one-bedroom apartments at $2,100. A 4.5 per cent increase for a $1,860 apartment adds $84 a month, or $1,004 a year.
Housing advocates say the legal allowable increases are making the housing crisis worse. Jill Atkey, CEO of the B.C. Non-Profit Housing Association had this to say: "For the average individual already struggling to pay the rent, along with transportation, food, school supplies and all the other expenses, that squeeze is real." She said she understands landlords are facing rising expenses for aging rental stock but “some sort of balance is needed.”
David Hutniak, CEO of LandlordBC, said landlords aren’t insensitive to tenants’ hardships but landlords face “double digit” increases in the three “main cost drivers” for rentals — utilities, insurance and property taxes. “The 4.5 per cent is not enough to cover our costs,” he said, adding maintaining rentals is a low margin business. He also called for all three levels of government to work to increase rental stock, including through federal tax policy to ease the “supply crunch.”
It's clear that there are a lot of problems with renting in BC, especially in urban areas. Just talking about the lack of respect for renters who have faced many increases over the last few years as the housing crisis spun out of control has many people frothing at the mouth.
Such could be seen on replies CBC journalist Justin McElroy's Twitter account when he posted an out of context 20 second clip of BC Liberal opposition leader Andrew Wilkinson talking about the problems that renters are facing.
The 20 second clip showed that Wilkinson had this to say: "I was a renter for 15 years, I lived in a dozen different rentals. It was challenging at times, but it was fun, it was a part of growing up and getting better, we've all done it. It's kind of a wacky time of life, but it can be really enjoyable. Being a renter is a fact of life, it's a right of passage."
What this clip didn't show, is that Wilkinson just before that segment was talking about how there is a shortage of the amount of rental properties, and that changes to the housing market and economy, as well as new rules put in place by the NDP to restrict landlord freedoms has stifled interest in people making their properties available for rentals.
What was a statement meant to be talking about young people just striking out on their own in life in their 20s was then clipped out of context and used by the CBC reporter to stoke outrage from renters in other situations - older, working poor, and young families putting off having children in the hopes of having a better living situation down the road.
Wilkinson clarified his comments a day later, but did not walk them back. "Most of us have a bouncy time in our early 20s, and that's what I was referring to by saying it's a wacky time of life. The goal is to have enough rental housing, so [renters] can find a more stable situation in their later 20s as they go into their adult life. We have to make sure that there's enough rental supply that people can have legitimate choices and maybe they'll find a place they're prepared to live their entire life. That's got to be the goal of government."
On the whole, that's a reasonable and logical thought process to have. But thanks to the CBC reporter covering Wilkinson from a biased and slanted angle, many people across the province now think that Wilkinson was directly insulting them. Justin McElroy, who blew up the story, who Wilkinson actually granted an interview with, repeatedly hounded Wilkinson to retract his remarks.
Wilkinson yesterday clarified his remarks, and experienced regret that they were misconstrued. In an interview with the CBC's Stephen Quinn, he had this to say:
"The statement in the legislature was referring my own life experience and I was talking about that period from 17 years old to 35, when I was a renter. I added it up last night and I actually moved 19 times during that period. It was, at times, difficult: some bad roommates and bad landlords, some very good roommates and very good landlords. So, it's one of those times of life you go through. Now, if people have misunderstood those remarks as talking about the fate of people throughout our society — I'm sorry. That's the kind of thing that leads to misunderstandings."
When asked by Quinn if he "had any idea what [families with children] are going through", which was a clearly leading question, Wilkinson said yes, he himself rented for 17 years when he first started out, and was fortunate enough to get a stable job where he could eventually buy his first property at 35 with his wife.
Quinn went further, and suggested that Wilkinson was trying to dehumanize renters in some sort of class warfare, which was complete and utter nonsense. Wilkinson rightly took exception with that characterization, with Quinn's question, which said "Where people were having difficulty with your statement is the suggestion is that renters are less than people who can afford to own a home."
Wilkinson said: "Oh, I think that's ridiculous. I'm not saying that at all."
"The point that needs to be made is that people have mixed experiences renting. We need to have a sufficient rental market so that people have choices, this is critical in the rental market."
So thanks to the CBC, who started a clearly slanted and dedicated smear campaign against the opposition leader, the NDP's broken promise on the renter's rebate was completely overlooked, and instead, Andrew Wilkinson is taking the heat on social media because 2 CBC reporters had it in their minds to make him look bad on the issue.
Supplementals:

Firing Line

Wilson-Raybould testifies at justice committee probing SNC-Lavalin affair

Jody Wilson-Raybould, the former Justice Minister and Attorney General testified this past Wednesday at the Justice Committee.
RE: SNC-Lavalin and Deferred Prosecution Agreement
She said that:

She received “veiled threats”
Was contacted by 11 different people in the Prime Minister’s Office
“For a period of four months from September to December 2018, I experienced a consistent and sustained effort by many people within the government to seek to politically interfere in the exercise of prosecutorial discretion in my role as the attorney general of Canada in an inappropriate effort to secure a Deferred Prosecution Agreement (DPA) with SNC-Lavalin."

She cited Trudeau from one of her meeting saying he said, “I am an MP in Quebec, the MP for Papineau”
Why? Job losses in Quebec
When she outright asked Trudeau if he was asking her to interfere, he said, “No, no, no, we just need to find a solution”
She also implicated Finance Minister Bill Morneau and his Chief of Staff, Ben Chin. They said that if a deferred prosecution agreement didn’t happen, SNC would leave Quebec and they couldn’t have that with the Quebec election.
Even more damning, the PMO offered to have an “eminent person” come in and do a review on the matter if Jody Wilson-Raybould felt she could not. This means that the PMO would bring someone in who would give them the outcome they wanted so that she wouldn’t have to.
The PMO also said they would line people up to write op-eds (favourable opinion pieces) in the papers if she found a solution.
Gerald Butts the now resigned principal secretary of Justin Trudeau said, “there’s no solution here that doesn’t require some interference.” And the Prime Minister’s Chief of Staff backed that up with the phrase, “we don’t want to keep debating legalities”
Back in 2006 one of the first Bills passed by the government of Stephen Harper was the Director of Public Prosecutions Act. This Act was designed to prevent future occurrences of the Sponsorship Scandal that saw government money funnelled to Liberal advertising in Quebec. This Act prevented the government from overruling the Director of Public Prosecutions created by this Act in 2006. If the government were to overrule the Director they would have to announce this publicly.
Gerald Butts hated this. In her testimony, Jody Wilson-Raybould said, “Gerry talked to me about how the statute was set up by Harper (and) that he does not like the law.”
Finally, Jody Wilson-Raybould also mentioned the Saturday Night Massacre.
The Saturday Night Massacre was the event when Richard Nixon in 1973 ordered his attorney general to fire the special prosecutor examining Watergate, he refused and resigned. The same happened for the Deputy Attorney general.
Her thoughts came true, a month later she was fired.
The Watergate scandal and subsequent obstruction of justice charges is what ultimately brought down President Nixon.
We are in uncharted territory. Harper’s Mike Duffy scandal and the Sponsorship Scandal all seem small compared to this.
Why? Rule of law.
Andrew Scheer addressed the media after the testimony finished and called on Trudeau to resign and that he had lost the moral authority to govern.
This was also echoed by many media columnists.
Andrew Scheer also requested the RCMP begin an investigation if they have not.
This was echoed by 5 former Attorney Generals asking the RCMP to investigate: Peter MacKay (Federal, 2013–2015), Douglas Grinslade Lewis (Federal, 1989–1990), Jonathan Denis (Alberta, 2012–2015), Cecil Clarke (Nova Scotia, 2007–2009), and Collin Gabelmann (BC, 1991–1995).
In the bizarre world we now live in as the result of this scandal, an opinion piece in the Toronto Star was written by Heather Mallick with the title, “SNC-Lavalin controversy? Just put it to bed.”
She wrote: “After spending the week trying to whip myself into a white lather over the SNC-Lavalin controversy or even rouse some latent enthusiasm, I still conclude that it is not a scandal, or even an affair… It is an office cubicle feud, the quietly seething-but-still-polite kind that entrances Ottawa but not the rest of us. Do young people even notice this story? No, they have bigger problems… Check your privilege, Canada. It’s the kind of upmarket quarrel we are fortunate enough to have but it needs to end before it does real damage.”
The real point of the column comes at the end, “It’s also a good idea for the Liberals to win re-election, as we need Trudeau to stand strong as the U.S. lashes out at us while descending further into frenzy.”
Rachel Notley also said something bizarre, “We will watch it as will all Canadians as more and more information comes out. I think at this point it’s too soon for me to offer up anything else.”
Obstruction of justice put simply is someone interfering in a criminal prosecution or law being carried out. We’ll leave that for the listeners to decide based on our summary of Wednesday’s testimony.
Supplementals:

Word of the Week

testimony -a formal written or spoken statement, especially one given in a court of law, or evidence or proof provided by the existence or appearance of something.

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Show Data

Episode Title: A Wacky Time of Life

Teaser: The costs for aging CF18s continues to climb, a damning fiscal update in Alberta ahead of an election, and an out of context clip of Andrew Wilkinson on renters in BC. Also, testimony on the SNC scandal causes calls for Trudeau to resign.

Recorded Date: March 2, 2019

Release Date: March 3, 2019

Duration: 52:13

Edit Notes: Internet cut at Wilkinson

Podcast Summary Notes

Duration: XX:XX