Peter Mackay says $10 billion gap in F-35 cost estimates is a matter of accounting

Fuel, oil, maintenance and salaries make up the difference, according to the Minister of Defence

Sean Kilpatrick/CP Images

Canada’s Defence Minister, Peter Mackay, said he had known since 2010 of the $25-billion price tag for the F-35 fighter jets. Mackay, however, claimed the $10-billion difference between what the federal government estimated since before last year’s election and the figures now being discussed is a matter of accounting. Mackay made the comments on CTV’s Question Period on Sunday, after the Government spent most of last week taking fire from the opposition over the issue of the cost to develop and replace Canada’s aging F-18 fighter jets.

An Auditor-General report on the issue released last week slammed the Conservative Government over the purchase process for the new planes, saying the National Defence Department mismanaged the purchase, low-balled the costs and hid information from Parliament. Later in the week, Auditor-General Michael Ferguson, suggested the government should have known the new jets would cost $10 billion more than announced, but Mackay said the $10-billion difference lies in whether jet fuel, oil, upkeep and pilots’ pay make part of the estimated cost. Mackay, whose resignation was called for by Liberal leader Bob Rae, also warned that pulling out of the program to develop the planes would probably involve costs to the Canadian government.




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Peter Mackay says $10 billion gap in F-35 cost estimates is a matter of accounting

  1. Very simply, no one ever asked how much the  whole program. would cost, only what the planes would cost.

    “Words mean what I want to them to mean. Nothing more, nothing less.”

    • Are you kidding me? 10 billion dollars for fuel, upkeep and pilot salaries? If more than a third of the cost is going to that, then they aren’t worth it. They are obviously stretching the truth. Do you serious believe that number?

      • But that is simply the cost of running an air force.  As a fraction of the total expenditures of government in Canada it is tiny.  If your argument is that it is too much, then it is irrelevant whether we buy the F-35 or any other combat jet. The operational costs will be similar.

    • That’s not even remotely true, so I’m guessing you’re intentionally limiting the scope of your comment to include only those venues in which official responses were sought through parliament?

      Because I’ve been watching the debate on this for years now, and I’ve listened to Conservative MPs of every stripe lie about the cost when asked directly by the media while being interviewed.

      Bad enough that they claimed that we had a guarantee in writing stipulating the $75 million price tag when we in fact we didn’t and the price might be twice that, but to downplay the additional training and maintenance costs as they’ve done over the years is just as bad in my view.

      No matter where the government representatives happen to be, they have a moral responsibility to be honest with the public in every case, and hiding behind phony technicalities is unethical at best.

    • MacKay is lying. The Harper Cons said the jets cost $75M each: $9B on the jets + 6B for maintenance. The U.S. Government Accountability Office said the actual cost of each jet is between $137M and $162M. Budget Officer Kevin Page said the total for jets and maintenance was more like $29B.  

      The Cons also keep lying about contracts. First they said they have a contract that “locks in” the price at $75M (which is pure nonsense.) The next they said lying to Canadians about the actual price is Ok because they have signed no contract (more nonsense.) Now MacKay says cancelling the contract will cost Canadians! 
      Every word that comes out of their yaps is a filthy lie! They obviously think Canadians are too stupid to notice. Let’s see how that works out for these con men.

      • Given the past four elections.. it’s been working out pretty well.

    • I am reminded, again, that sarcasm, irony and satire do not have html tags on the internet. 

  2. Resign……nothing less will do. Accounting issue! stop treating us like idiots

  3. Peter McKay’s job should be an accounting issue; Zero value added position= position not required=terminated!

  4. God these guys are arrogant; they think Canadians are stupid and will believe any crap they tell us.
    Too bad I do not see any decent leadership in the other parties.

    • Sadly…. Canadians ARE stupid and do believe it =  majority government.  

      I can;t tell you how many times my 85 year old parents have told me the problem with Ignatieff or Rae or Layton, and their beliefs are WORD-FOR-WORD Conservative talking points.The Conservatives have followed the Cheney/Rove practise of U.S. polsitics — tell a lie that is so far to the right, that to “balance” it, you effectivly move the “middle”.

    • I think a room full of monkeys could do a better job………

  5. Imagine if you were given 10 billion dollars but told you would have to receive it at one dollar every second, or $3600.00 every hour and on and on and on.  It would take 310 years in time, one second after another to reach the total amount of 10 billion !!!
    How stupid do the CONS think Canadians are?  Our tax money, and they spend and lie on spending and call any discrepancy a matter of accounting, and we have 4 more years of these idiots?  It’s time for the whole lot to disappear.  The next election will be welcomed and one thing is assured, the lies will come every second, every hour and on and on and on. 

  6. The CRA fines and jails people over” accounting differences”. Apparently, they treat such differences much more seriously than do the PM and certain members of Cabinet.

    • Keith thinks he will pay X amount of taxes over the next 36 years, based on an estimated lifetime of income and his estimate of tax-related expenses. 
      Bureaucrats say he will pay X plus 40% taxes based over a 20 year period and their estimate of allowable expenses.
      Apparently Keith is willing to pay fines and go to jail over a disagreement of proposals.
      For the sake of Keith`s family he should hire a lawyer.

      • Not sure if you’re trying to dispute my point or restate it less clearly.

        Let me state it more clearly: when the rest of us get creative with our finances there is a cost to pay. Mackay thinks it’s perfectly legitimate to play fast and loose with the numbers. As a taxpayer who will be on the hook, I disagree.

        Ask the Nortel employees and stockholders how they feel about the creative accounting practices their executive used to engage in…

        • I just find it amazing that because of your distaste for the Conservative government you would make the analogy that their crime concerning inaccurate future estimates is equivalent to you going to jail, not for last year`s inaccurate tax return, but for making an inaccurate estimate of your taxes in 36 years time. 

          • To what standard should we hold our elected representatives?

            To what standard is an MP to be held to before Parliament?

            Do you remember why the Conservatives were found in contempt of Parliament?

            How does this amount to “good government?”

          • I remember the contempt charge against our duly elected Canadian Government by 3 desperate opposition parties was every bit as silly as the analogy made by KB above.

          • That’s nice that you remember the contempt charge happened, but I notice you completely failed to answer any of Pickngrin’s questions.

            Personally, I think that’s because you don’t have an answer to either of the first two that you feel confident won’t be (or hasn’t already been) violated by the very gov’t you support.

  7. More ‘accounting’ issues from a government that is headed by an economist and claims to be good fiscal managers. All I can do is laugh cynically at a recurring theme.

  8. Yes, it was, he was “accounting” on pushing this through by lying and bullying. But it’s not working anymore is it Pete?

  9. The amount of the  low ball is $13 billion not $ 10 billion. The PBOs figures will be closer (although still low) when all is said and done.

    20 years of HR costs for two pilots and four mechanics per plane is less than 1% of $ 10 billion.
    The accessories for the plane- $ 4.13 billion were in the original $ 9 billion costs.
    The best estimate for the cost of the planes from the US government (this rise was not addressed by the AG) is up over $ 7 billion from $ 4.8 billion.
    The O&M for the F-35 is now up to $ 17 billion if (and of course this is unlikely) MacKay is right.
    Defence inflation is usually 7%.

    The F-35s are on track to cost $ 39 billion before interest, refueling planes and replacing crashed F-35s for the first 20 years. Over 30 years this is likely a $100 billion dollar project. About $ 3 billion per year of the planes life cycle and then interest in perpetuity.

  10. 10 billion? oh my fuck

  11. This comment was deleted.

    • I think it’s cool that the “cunts” who run this “Liberal” blog find it okay to refer to the elected Government as “cunts”… nice. Good for you MacLeans “cunts”!

  12. The mainstream media wasn’t complaining about lying and accountability when the Liberal government was lying and hiding the true multi-billion dollars costs of the long gun registry.

    The mainstream media also showed no interest in previous defense procurement screwups under the Liberals…i.e. various helicopter programs, and the submarine program.  If they had, the problems in DND might have been fixed long ago.

    • Oh yeah right, I totally remember how the ‘mainstream media’ forgot to cover the $100 million sponsorship scandal that toppled a government and destroyed a political party.

      What a horrible, pathetic, ad hominem, partisan defense you offer:  ”The Liberals did it too!”  (patented whine of the Conservative who is caught).  

      B*tch, this is a TEN BILLION DOLLAR boondoggle.  Mackay should be fired / resigned / gone TOMORROW.

      • The mainstream media was silent for years while Chretien government advertising was being plastered mostly in Quebec promoting the Chretien government, with asking any questions at all.  If the mainstream media had actually covered sponsorship from the beginning when the advertising was everywhere to be seen, it would have prevented the Liberals from committing political suicide.

        Contrast that with the almost immediate hysteria by the mainstream media about the economic stimulus program (EAP advertising) for the advertising and media industry during the Great Recession, to support those Toronto-based industries during the economic crisis.

        • It’s almost as if, after the sponsorship scandal, they paid closer attention to that stuff.  Weird.

        • There was nothing inherently illegal about advertising in Quebec.

          The problem was the loophole that allowed for theft to go unnoticed.

          Initially the media was all over the accusations concerning Adscam, but with little fuel or proof it eventually faded.

          Once there was actual proof provided by the AG, the media pounced again.

          So what is your complaint exactly?

          The robocall scandal is similar. Once the investigation is done and the results are in, THEN we can make a determination, and THEN the papers, who’ve now dropped the issue as they did Adscam after a few weeks, will attack anew, again, just as they did with Adscam.

          Perspective my dear sir, perspective.

    • “The mainstream media also showed no interest in previous defense procurement screwups under the Liberals…i.e. various helicopter programs, and the submarine program.”

      What complete utter BS. Both got plenty of coverage. I personally gave the Libs grief over the helicopter nonsense, thanks to MSM reporting.

      Handling of the DND portfolio was definitely not one of the Liberals’ strengths. But that does nothing to excuse the current blundering. Why is it your response to every screw-up is “the media are biased” and/or “the Liberals did it first”? It’s getting really old. Grow a pair and actually address the issues surrounding this government rather than always blaming others. That goes for the other CPC flacks on here as well.

  13. 10 billion due to accounting? I want to learn this new accounting method!

    • It’s called “running out of fingers and toes, then guessing.”

  14. Contract KickBacks:

    Lessons on How Harper’s Reform
    Party is Run:

     

    A “Fat Cat Businessman” gains
    the trust of a government official.  Soon
    “Fat-Cat Businessman” gives government / politician guy wads of cash in exchange
    for unfettered access to all the good juicy untendered contracts.

     

    If politician man can not find
    willing and corrupt businessman, in a pinch, the politician will use one of his
    friends or mistresses to start up a company, give them the contact, and then
    those two start issuing inflated invoices, bam, split the graft, done.

     

    Everyone else in society is left
    scratching their heads trying to figure out why politician guy makes such weird
    and crazy policy decisions that maken nO SeNsE.

     

    http://www.nationalpost.com/todays-paper/process/6327676/story.html

     

  15.  

    repost from NP commentor:  And I hope we all understand the contract
    price and the invoice price are not the same.  The aircraft is the loss-leader.  The real money is in the “engineering
    change orders” and the “service parts”.

     

    And let’s not overlook the cash
    bribes in exchange for the untendered contracts.

     

     

  16. repost from Michael McNeil -
    There’s another form of payola.  Business
    men will fund lobbies who are friendly to Harper’s Reform Party.  For intance, just as Tory backbenchers begin
    making petitions against abortion, these individuals will financially support
    PSAs.  When oil companies need the
    government’s help, the government will fund envriomental studies by pro-oil
    environmentalists.  All that remains is a
    little reconcilliation between business groups. 
    At the end of the day, everyone gets what they want, and Tory MPs await
    their “private pensions”, aka very lucrative private sector
    consulting contracts or positions.  There
    remains no direct link or money trail for any auditor to discover.  “No evidence, no crime.”

     

    http://www.cbc.ca/news/canada/story/2011/05/24/canada-bribery-report.html

  17. MacKay insults us all when he expects that we will believe him now or any time into the future. Do us a favor and resign.

  18. Quit wasting our money on war toys for boys!

    The real threat to our sovereignty is an economic threat. The Russians, Chinese, and the USA want and need our resources. It is not in their interest to bomb us. Rather, they are buying our country. This is not a threat that can be countered by fighter aircraft doing 500+knots or, for that matter, submarines under the water!

  19. It would be nice if the feces brained rodent would put a gun to his head and rid the world of his kind of vermin.

  20. From now on, when the government provides an estimate of the cost of something like “state-of-the-art” fighter planes, we should all mentally tack on another $10 billion or so. After all, when politicians are campaigning hard to get elected, they will naturally try to minimize the cost of military programmes like new fighter jets. 

  21. What do you even say anymore?

    The irony of all ironies: a government that rode a wave of accountability and transparency becomes the most centralized, unaccountable and obtuse government in Canadian history.

    Nobody’s getting what they want here:

    The social right is ignored.
    The fiscal right is ignore.
    The social liberals are disdained.
    Even the fiscal liberals, who love spending like crazy as Harper has done, are watching the money go to things they detest.

    Honestly, I’m having trouble understanding just who is winning with this government. LOL

    • Those who hold labels as more important than actions.

  22. And Pigs can Fly

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