Taxpayers face $300 billion price tag for new Navy warships

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Parliamentary Budget Officer Yves Giroux pointed to a few more torpedoes related to the Royal Canadian Navy’s problematic plan to buy new warships.

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Taxpayers now face a price tag of more than $300 billion for the 15 ships, Giroux warned Thursday.

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This includes the cost of building Canadian combat ships as well as operating, maintaining and upgrading ships over their lifetime.

Giroux’s numbers are clear — the development and purchase of the 15 ships, which the government approved with a price tag of $26 billion, will now cost Canadians $84.5 billion.

The cost of operating and maintaining ships over the next 65 years will be $219.8 billion. This includes mid-life upgrades for ships with additional technology.

This latter figure represents a significant increase in costs for taxpayers; in 2013, the auditor general’s office noted that this figure would be $64 billion over 30 years.

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“Every time we look at this (project), the costs go up,” Giroux said Thursday.

The Canadian Surface Combatant (CSC) project — the largest expenditure in Canadian history — has become the poster child for the country’s ailing military procurement system. Concerns have been raised about a lack of accountability and oversight of the program as well as the secrecy surrounding the initiative.

Although costs continue to rise, National Defense is confident that it will not change course.

Previously, National Defense officials said they don’t expect the price to rise.

On Thursday, the department acknowledged that it did not yet have an idea of ​​the ultimate cost to taxpayers of the ship’s purchase. “The total cost of the project will continue to be refined,” he noted.

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“Project costs will evolve throughout the life of a project,” the department added.

Construction of CSC’s first warship is not expected to begin until 2024.

Defense Minister Anita Anand and Deputy Minister Bill Matthews have been overseeing the CSC project since early 2019, first when they were at Procurement Canada and now at National Defence.

Anand played down concerns about problems in the country’s military supply system, instead saying there are many success stories.

Conservative MP Kelly McCauley, a member of the House of Commons government operations committee that asked Giroux to review CSC, said the government didn’t seem interested in trying to halt rising costs. “Each new update causes more delays and billions in additional costs with no end in sight,” he said.

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McCauley and some fellow MPs believe CCS will eventually cost more than $100 billion to build.

Giroux said a one-year delay in the project added $7 billion to the estimated final tally.

CSC was started by the previous Conservative government, but in the summer of 2015 it was talking about limiting the project’s rising costs by reducing the number of ships to be built.

But the new Liberal government rejected that idea and committed to the 15 warships.

Other costs for CSC may soon emerge over the next few months.

Irving Shipyard in Halifax was selected in 2011 as the winner to build new fleets of warships for the Navy, including CSC. Among the conditions required to win the tender was that the shipyard had the capacity to build the ships and that taxpayers would not need to contribute funding to equip the facilities for the task.

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But Irving is now asking the federal government for additional funds so it can upgrade its facilities to build the CCS. Industry sources say the Liberals plan to provide at least $300 million to the shipyard owned by one of Canada’s wealthiest families.

Former National Defense procurement chief Alan Williams said it was now clear that the CSC project was spiraling out of control.

He said the only good news is that a contract has yet to be signed and it’s not too late for the Liberal government to take a different approach.

“I have sympathy for the Royal Canadian Navy,” Williams said. “They need new ships, but if they continue on the current path with CSC, they might not get any.”

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Eleanor C. William