Cancelling F-35 will cost taxpayer $1 billion in benefits, royalties: MacKay
OTTAWA - A battle of numbers has broken out over the Harper government's deal to buy the F-35 joint strike fighter jet.
Defence Minister Peter MacKay says the country stands to lose up to $1 billion if the purchase of the stealth jets is scrapped, largely because of lost economic benefits in research and development.
The loss estimate includes up to $100 million in royalties earmarked for the federal treasury because of Canadian research on the aircraft. Ottawa invested in the development phase and is in line for a cut of export sales to other countries.
MacKay underlined that the $9 billion price tag for the initial purchase of 65 F-35s is firm — a number critics say will only increase.
"Many figures have been circulated on the cost," the minister said in a speech Friday before the Conference of Defence Associations.
"Let me repeat it. $9 billion. I have no idea where these other figures are coming from. They're simply made up — or they're guessing.
"If this procurement is cancelled ... so another competition can be held, it will cost taxpayers $1 billion and will create an operational gap for the air force in the future."
The parliamentary budget officer, meanwhile, is putting the finishing touches on a detailed analysis of the deal, which has become a political lightning rod. The Liberals promise to halt the purchase and hold an open competition.
Kevin Page's report is expected in the next few weeks.
An interim analysis his office released Friday, examining the fiscal transparency of some major Conservative initiatives, pointed to the F-35 as an example of foggy accounting.
The analysis noted "insufficiencies" in figures laid before Parliament, and said not "all the cost drivers" have been accounted for.
Page warned that the government's estimates are based on figures from the air force office overseeing the project, and have not been independently verified.
The purchase price for each aircraft will vary every year, depending on the number of planes being ordered. And since the stealth fighter is still under development, there are no hard numbers on how much it will cost to maintain over 20 years.
The Harper government has yet to sign the contract, but expects to take delivery between 2017 and 2022.
MacKay said the deal is the best one for taxpayers.
"We're buying the F-35 at the peak point in production when the cost of these aircraft is projected to be at its lowest," he said.
He recalled the Chretien government's 1993 cancellation of the EH-101 Maritime helicopter purchase, which cost taxpayers up to $500 million in penalties. The Sea Kings, which were supposed to be replaced with that project, are still flying today.
The F-35's manufacturer, Lockheed Martin, is scrambling to finish development of the plane's software systems, one of the big selling points for the highly automated fighter. It has hired over 100 software engineers to complete the work by 2016.
The cost of the U.S. program has ballooned to over $386 billion, making it the most expensive military procurement in American history.
U.S. Defence Secretary Robert Gates has put segments of the program — notably the vertical take off and landing version of the aircraft — on probation.