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House Hansard - 75

44th Parl. 1st Sess.
May 19, 2022 10:00AM
Context: House Hansard - 75 - May/19/22
Hon. Filomena Tassi
  • May/19/22 6:50:18 p.m.
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Madam Chair, what I would acknowledge is that COVID has had an impact around the world. With respect to the shipyards, there is no question that COVID has impacted costs of labour and supply chain issues. We always work in a way to maintain having costs match up to the quotes that are given, but COVID has presented a number of challenges, not only in shipyards but also all around the world in supply chains and labour.
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Mr. Pierre Paul-Hus
  • May/19/22 6:50:49 p.m.
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Madam Chair, was Canada the only country to experience COVID‑19 or did it happen in other countries as well?
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Hon. Filomena Tassi
  • May/19/22 6:50:56 p.m.
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Madam Chair, COVID has happened around the world.
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Mr. Pierre Paul-Hus
  • May/19/22 6:51:00 p.m.
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Madam Chair, I have another point that was raised by officials from Public Services and Procurement Canada. On April 7, these bureaucrats told the committee that we can expect further cost overruns and delays regarding the delivery of new ships for the navy and the Coast Guard, and that the multi-billion dollar shipbuilding program faces significant challenges. Will the minister admit that billions of dollars in cost overruns are already expected?
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Hon. Filomena Tassi
  • May/19/22 6:51:26 p.m.
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Madam Chair, I have had an opportunity to visit one of the shipyards, and the work that is going on there is second to none. To see the extent of what is taking place here in Canada, on Canadian soil, to produce these ships is absolutely fantastic. It is creating jobs and economic growth right here in Canada.
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Mr. Pierre Paul-Hus
  • May/19/22 6:51:58 p.m.
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Madam Chair, nobody is questioning the shipyard employees' work. What we are questioning is the excessive cost overruns taxpayers have to cover for projects that, to make matters worse, are often delayed. There are delays. Here is my question. Are these delays and cost overruns due to government management, or does the problem lie with the shipyards?
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Hon. Filomena Tassi
  • May/19/22 6:52:23 p.m.
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Madam Chair, just so that we are aware, I want to point out some of the benefits that the national shipbuilding strategy and the investments that we are making are having on Canadians. First, there is the creation of jobs, which includes the creation of over 18,000 jobs per year that are created or maintained. In terms of the economic benefit, it is $1.54 billion annually to the economy. With respect to overruns, I have already mentioned that COVID has had an impact and that does impact some of the overruns that have been faced.
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Mr. Pierre Paul-Hus
  • May/19/22 6:52:57 p.m.
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Madam Chair, Troy Crosby, the person responsible for National Defence procurement, told the committee that the ships are not being built fast enough and that they are costing more. I want to know if the minister has sent the shipyards an official letter, directive or document of some sort expressing the Government of Canada's concerns about the delays and cost overruns. If so, when did she send it? If not, why not?
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Hon. Filomena Tassi
  • May/19/22 6:53:25 p.m.
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Madam Chair, we are constantly monitoring the progress of the shipyards. We are working very closely with the shipyards. They are working very hard to keep their projects on budget and on time, but they have faced challenges, as I have already mentioned. We continuously monitor the situation and do whatever we can to assist to ensure that those ships are built as quickly as possible and with the amount that has been allotted.
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Mr. Pierre Paul-Hus
  • May/19/22 6:53:54 p.m.
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Madam Chair, about the construction timeline, the Parliamentary Budget Officer estimates that construction of the first polar icebreaker will begin in the 2023-24 fiscal year, and the second in the following year. The ships should be delivered in 2029-30 and 2030-31, respectively. How can they even have a timeline when the Davie shipyard is still not an approved partner in the national shipbuilding strategy?
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Hon. Filomena Tassi
  • May/19/22 6:54:25 p.m.
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Madam Chair, again, we are working with the shipyards. I would like to point out that we have actually had five large ships delivered already. Three of the offshore fisheries science vessels have been delivered, and two of the AOPS have been delivered. Other projects are under construction. We are going to continue to work with the shipyards, and we will ensure that we continue to monitor the situation and do what we can to support them. We know how important it is to keep these jobs here in Canada and have this production take place here in Canada.
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Mr. Pierre Paul-Hus
  • May/19/22 6:54:58 p.m.
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Madam Chair, let us talk about some of projects that are currently being delivered or have been delivered, particularly the Arctic and offshore patrol ships. A witness who appeared before the Standing Committee on Government Operations and Estimates last week, Mr. Kendrick, said he really could not understand why the cost of the seventh and eighth ships to be delivered to the Canadian Coast Guard will exceed $1.5 billion, while Norway is building three larger, more powerful ships for a total of $700 million. Can the minister explain that?
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Hon. Filomena Tassi
  • May/19/22 6:55:30 p.m.
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Madam Chair, I would point out that it depends on what the specs are with respect to the ships that are being built.
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Mr. Pierre Paul-Hus
  • May/19/22 6:55:41 p.m.
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Madam Chair, obviously it depends on the ships. In the case of these ships, however, we understand that the contract for the first five ships was for $400 million each, but the sixth ship is going to cost $800 million, bringing the total to $2.8 billion. We have learned that the total bill for all the ships would be $4.3 billion. The cost per ship normally goes down, but instead it is going up. The seventh and eighth ships ordered are going to cost $1.5 billion. After gaining experience from building the first two ships, we should be improving, not regressing. Can the minister explain why this is costing more, not less?
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Hon. Filomena Tassi
  • May/19/22 6:56:21 p.m.
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Madam Chair, we continue to monitor these ships as they are being built. The estimate for the ships that I believe the member is referring to, the two vessels, is projected to be $1.5 billion. We are going to continue to monitor the situation and ensure that the ships being built are required. There may be instances, for certain ships being built, that the design changes, but we continue to work with the shipyard. We are also continuously monitoring the price to see if the ships are over budget. We are constantly looking at that and determining what is bringing them over budget, and we are keeping a close eye on it so we can continue to work with the shipyards and they can deliver things as quickly as possible and respond to the specs.
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Mr. Pierre Paul-Hus
  • May/19/22 6:57:09 p.m.
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Madam Chair, for some time now, the minister has been telling me that the government is monitoring the work very closely. Why does the Parliamentary Budget Officer regularly complain in his reports that the government is so cagey that he cannot get any information? The committee is in the same boat, and the experts who came to testify told the committee members that they were not allowed to know more. Since the minister is so well informed, why are the experts and especially the Parliamentary Budget Officer not allowed to have that information?
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Hon. Filomena Tassi
  • May/19/22 6:57:42 p.m.
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Madam Chair, we are open and transparent in the way we move forward. We have been clear about the benefits with respect to the shipyards and what they produce, such as the economic benefits and the jobs that are being created. We are open and transparent with those numbers because we know that is important to Canadians. We will continue to carry on in that way.
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Mr. Pierre Paul-Hus
  • May/19/22 6:58:04 p.m.
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Madam Chair, let us talk about transparency. I will give the minister an opportunity to say more. The committee recently heard from representatives of Irving Shipbuilding. For the contract to build the 15 new frigates, the president mentioned that Irving's bid was under $60 billion and added that the government had announced that it would cost $60 billion. However, the Parliamentary Budget Officer estimated that the frigates would cost $77.3 billion to build. Given that Irving's figure was less than $60 billion, the government's figure was $60 billion, and the Parliamentary Budget Officer's figure was more than $77 billion, could the minister, in the name of transparency, tell us the projected cost of building these frigates?
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Hon. Filomena Tassi
  • May/19/22 6:58:50 p.m.
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Madam Chair, again, throughout this process we are monitoring what the ships are going to cost, monitoring where the shipyards are at and working very closely so that we can be open and transparent with Canadians. That is the process we have undertaken thus far and we are going to continue that process. The PBO did include taxes, so that may be part of the discrepancy, but at the end of the day, if there is any suggestion that we are not open and transparent about the numbers, I totally disagree with the member's premise.
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Mr. Pierre Paul-Hus
  • May/19/22 6:59:26 p.m.
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Madam Chair, let us talk about transparency again. An article in the April 19, 2021, issue of the weekly newspaper The Hill Times discusses the secrecy surrounding the fees that the federal government has paid to Irving, the prime contractor for the construction of these 15 surface combatants. We know that Canada is paying Irving fees, but the Department of National Defence refuses to disclose the cost of these fees. Out of respect for taxpayers, how much has the government paid for this?
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