Proceedings of the Standing Senate Committee on
National Security and Defence

Issue 6 - Evidence - Meeting of June 21, 2010


OTTAWA, Monday, June 21, 2010

The Standing Senate Committee on National Security and Defence met this day at 4 p.m. to examine and report on the national security and defence policies of Canada. (topic: the state of the Canadian Forces).

Senator Pamela Wallin (Chair) in the chair.

[English]

The Chair: Ladies and gentlemen and senators, welcome to a meeting of the National Security and Defence Committee. It is Monday, June 21, and we are so pleased to have with us today the Honourable Peter MacKay, our Minister of National Defence. With the minister today we have Vice-Admiral Denis Rouleau, Vice Chief of the Defence Staff.

Welcome, and thank you for being here. We would like to give you the opportunity to make your opening statement, sir.

Hon. Peter MacKay, P.C., M.P., Minister of National Defence: Thank you very much, madam chair. Honourable senators, committee members, I am pleased to be here with Vice-Admiral Rouleau. It is always a pleasure to come before your committee.

I want to begin by thanking you for the important work you do on behalf of the men and women in uniform. It is duly noted, and your personal enthusiasm and commitment for the subject matters is of great importance to the Canadian Forces and valued by the department.

Unfortunately, today I begin my remarks on a sad note. As senators would have heard, we lost a young man, Sergeant James MacNeil of Glace Bay, Nova Scotia, who was killed after an improvised explosive device detonated in the Panjwaii district in Afghanistan. I know that all senators will join me in mourning his loss and extending our condolences to his family and loved ones.

Today was also a day in which we witnessed an historic event here in Ottawa, and that was the change of command of the Chief of the Army. We saw the torch pass from Lieutenant-General Andrew Leslie to the incoming head of the army, Lieutenant-General Peter Devlin, in a very stirring ceremony at the Canadian War Museum here in Ottawa.

Let me begin by expressing my gratitude for your ongoing interest in the Department of National Defence. It has been my privilege to visit Canadian Forces at home and around the world, as have many of you, and I can tell you that the respect that Canadians have for the Canadian Forces today is well deserved. They are exemplary individuals doing first rate work — our finest citizens. Canadians are recognizing this openly in many ways by demonstrating their affection, admiration and appreciation throughout the country.

Madam chair, as I think you and the committee are well aware, this has been a very busy time for the Canadian Forces. Our men and women in uniform are working very hard in places like Haiti, the Olympics, Afghanistan, 16 other operations ongoing, and now, as we speak, they are making the final preparations in support of the RCMP in providing the security for this week's G8 and G20 summits in Toronto and Muskoka. Our Canadian Forces members will take their experience, training and some of the lessons learned at the Vancouver 2010 Winter Olympics and put this into practice at the GTA and in the Muskokas.

Throughout all this activity, they have been carrying out their more routine domestic duties. At one point earlier this year, the Canadian Forces were carrying out four of six core missions outlined for them in the Canada First Defence Strategy. The way they concurrently perform this wide variety of missions is a source of pride amongst the Canadian Forces and an example to our allies.

[Translation]

This government recognizes the importance of ensuring the Canadian Forces have the tools they need to carry on this kind of work. That is why we unveiled the Canada First Defence Strategy two years ago, to ensure Canada has a first-class military capable of taking on the threats and challenges of the 21st century — a military that can deliver excellence at home, be a reliable partner in the defence of the continent and project leadership abroad.

But the Department of National Defence and the Canadian Forces are not just busy carrying out the core missions outlined by the Canada First Defence Strategy. They are implementing the strategy with balanced investments across the four capability pillars — personnel, readiness, infrastructure and equipment. And we are already seeing payoffs from these investments.

[English]

One of our key priorities has always been to focus on personnel and their families. I know that senators share that view. A renewed emphasis on recruitment has helped us meet our latest yearly recruiting goal, and we are now well on our way to our objective of having 70,000 regular force troops, as well as 30,000 reservists.

We have also taken steps to ensure that our troops and their families are cared for. For example, we have established integrated personnel support centres to ensure our ill and injured personnel have access to a high standard of care from coast to coast.

We have invested millions of dollars to address mental health issues within the forces. We have also recognized the important role military families play in the success of the Canadian Forces. We have established a covenant to let military families know just how much we value them and have taken steps to back up those words, like reinvigorating our military family resource centres and supporting the Military Family Services Program.

In addition to our focus on people, we have also been working on improving our infrastructure, which is of course where our forces and their families live, train and raise their families. In the past 12 months I have announced millions of dollars on new or renovated infrastructure, new maintenance facilities in Valcartier, road upgrades in Cold Lake, health service centres in Gagetown and Kingston, and many other centres around the country.

In total, we have pledged over $2 billion in infrastructure spending since May of 2008, and we are beginning to see the revitalized bases now emerge across the country.

We are also making sure our forces are able to continue responding rapidly to catastrophes and operational changes. The Canadian Forces' ability to maintain a high state of readiness depends in large measure on effective training. We have made sure that the army, navy, air force and special forces have the opportunities they need to train in realistic environments. This training ensures that our troops are ready at a moment's notice for any eventuality.

[Translation]

But perhaps the most dramatic successes we have seen have been in the area of equipment; 2010 has been a particularly good year, a year of deliveries.

[English]

This has been a year of deliverables when it comes to equipment. The air force has accepted the last of the upgraded CF-18s, our fighter planes, on schedule and on budget, and the first of its new CC-130Js, six months ahead of the original schedule and, I note, under budget.

The army is upgrading its LAV IIIs and the procurement process is well under way for its family of land combat vehicles.

Meanwhile, the navy, in its 100th year, is proceeding with the Halifax class, Frigate Life Extension programme — or FELEX — a program that will rejuvenate one of our navy's core fleets.

Earlier this month, along with Minister Shea, Minister Ambrose and Minister Lebel, we announced the National Shipbuilding Procurement Strategy. This strategy will set the stage for building, in Canada, the ships needed for the federal fleets, including the navy, while creating jobs and economic benefits at our shipyards, as well as small and medium enterprises across the country.

In conclusion, madam chair, everything we do as part of the Canada First Defence Strategy — which required tremendous input from both the current Chief of the Defence Staff and his predecessor, as well as Vice-Admiral Rouleau and many others in the department — is meant to give our men and women in uniform what they need to do the important tasks that we ask of them, and they have been doing that work admirably. However, we know there are challenges, one of which I mentioned at the beginning of my remarks, namely, the ongoing scourge of IEDs in Afghanistan, and predictably in the future on other deployments. We are seized with this issue collectively as a country, as we are with our allies, to face this threat and to give our men and women the most protective equipment we possibly can.

Next year, with our military engagement in Afghanistan drawing to a close, this will create new challenges in new areas. At the same time, we need to continue implementing the Canada First Defence Strategy while recognizing the broader fiscal context that the government is currently facing.

We have no illusions with regard to the complexity of these challenges, as I am sure none of you do. We are confident that we can overcome these challenges, and this government has worked hard to give the Canadian Forces the best support possible.

I would encourage this committee to continue the important work you have done in supporting the Canadian Forces, and to help us find solutions as we face the challenges that lie ahead. I thank you for your time and I look forward to your questions.

The Chair: Thank you, Mr. Minister. We would add our voice to yours in saying to the family of Sergeant MacNeil that we are sorry for their loss and very proud of what they have done, because this is a family contribution.

If you had to assess where we are from nine years ago, do we have the right equipment in that theatre of operation to prevent, as best we can, against the IED?

Mr. MacKay: We do have the best equipment possible. When compared to some of our allies who we are there shoulder to shoulder with, particularly in Regional Command South I can say with certainty that the equipment there is saving lives. — I know some members of the committee have visited Regional Command South. The equipment is saving lives in terms of the protective armament on equipment such as the Leopard 2 tanks and some of the LAVs and the upgrades that occurred before those armoured vehicles were sent back into theatre, but also on the prevention side.

The prevention side includes measures that were recommended by the independent panel, of which you were a member, including UAVs, which allow for the prevention in some cases of IEDs making their way into the road, threatening and taking the lives of Afghan citizens, allies and our own men and women. It also includes the equipment that we are seeing now deployed for detecting these IEDs in the roadway.

Despite the difficult experience with IEDs, I cannot say enough about the tremendous courage of the people in the IED disposal units. I would single out among them the navy divers, who are on what you would only describe as the very sharp end of the stick when it comes to detecting these IEDs.

The short answer to this question is that one can never do enough, but we have come a long way in providing protective and preventative equipment. We continue to work with our allies in that regard, as well as in information sharing. We are also enabling the Afghan National Security Forces, who are becoming increasingly adept in their own abilities and able to discern from local populations where these IEDs are and where they are coming from.

The Chair: We will explore that area, because I know there is much more cooperation now with the local Afghans on that issue.

[Translation]

Senator Dallaire: Mr. Minister, welcome to our committee. I want to start off with a comment.

Once again, the members of the Canadian Forces and their families have shown strength of character, courage and remarkable support for the country and the politicians who supported and kept up the crucial pace required to carry out the mission. That is largely due to the department's efforts in the areas of personnel and personnel support.

I will not go so far as to ask when we will see shovels in the ground for the Voltigeurs armoury project or what is happening with the Sierra Leone mission medal, which members have been waiting on for four years now — including my son. Nor will I ask why no one was sent to the Congo. I will be more strategic.

In 1987 your predecessor, Mr. Beatty, issued a white paper.

[English]

This outlined the capital program. The overall defence budget required a 3 per cent increase to the baseline annual above the annual expenditures. That would be the only way the capital program, in particular, and the personnel side, would be affordable. If they got that 3 per cent, the program would be implemented. Mr. Wilson destroyed that within two years when it turned out that they could not afford 3 per cent and it ended up by bumps. Every project had to go to the centre to get extra funding over the baseline to get these capital projects going.

Now we see your program and the baseline, but we also see in correspondence, particularly in the media, that many of these projects have funding that is earmarked; that is to say, it is not within the baseline capital program, but this funding would be earmarked and they would have to fight for the funding in order for it to be implemented. Is that factual or is that erroneous?

Mr. MacKay: Senator, let me begin by saying I would always defer to you on operational matters, with your extensive experience within the military. I say that very respectfully.

With respect to the Canada First Defence Strategy, as honourable senators know, this was a document that evolved over some time with considerable input within the department. It does include a 2 per cent escalator clause that guarantees that increase in the base funding line, as you have referred to.

The overall total money that is within that strategy, which is outlined in a 20-year, visionary document, is well in excess of $490 billion. That does include, of course, money earmarked for procurement.

On the particular announcements that have been made, the land combat vehicles, which were in the range of $5 billion and included the TAPV, tactical armoured patrol vehicle, the LAVs themselves, and other vehicles, including the Militarized Commercial Off-the-Shelf vehicles, or MilCOTS. The MilCOTS, as you are aware, are more like utility vehicles on the base. That money is there. It is not only earmarked, but it is in the bank. Those procurements have moved.

We have others in the pipeline. I do not want to make announcements here today, but we obviously have a number of ships that are part of the shipbuilding strategy. That money has been identified within the budget, so it is there. We will not have to seek increased funding for that particular envelope.

I suspect you may have questions on the next-generation fighter aircraft. That money, as well, has been identified within the existing budget lines for the department.

These procurement projects, as we have seen in the past, can be subject to cancellation by governments. They can be subject to escalating costs, as we saw with shipbuilding. We saw fluctuations in the dollar, so the cost of steel and labour factor into this. When you are procuring projects over a long period of time, as senators would know, while there is an attempt to accurately predict what the costs will be from the procurement design stage through to delivery, the costs sometimes change.

To the best of our ability, within the department, we have identified the funding line for the replacement of all those projects I have mentioned, and others, without going outside or having to request a new funding line.

Senator Dallaire: The capital program is always movable, and you will move cash from one project to another within that line. The program is affordable within that 2 per cent line. Whether it is the F-35s or whatever, we are working with an affordable capital program that is now identified within the budgetary process and we do not have to seek extra funding above that to move the capital projects forward. If some have to shift, then you move money from one project to another. Often, that meets the requirement. You were confirming that.

Mr. MacKay: We have not had to do that senator. We have not moved money from one project to another. We identify the needs for a certain procurement line, a certain project. The money is then dedicated to that task. I can provide you with an itemized list. For example, in addition to some of the projects that we mentioned, the C-130 Hercules was a good news story in terms of the timing, because, as you know, some of this equipment is truly in need of urgent replacement. We saw that with Sea King helicopters. We are experiencing that with the Buffalo on the West Coast, and with the fixed-wing search and rescue aircraft. Some of these Hercules aircraft have tremendous numbers of hours on their airframe. We have upgraded the CF18s. That will take us well out into 2017, 2020 territory for their replacement. We have taken delivery of the C-17 heavy transport aircraft that we did not have before; Chinook helicopters, as well — both used helicopters now in theatre and we are booked with Boeing to get the F model, the new Chinook heavy-lift helicopters.

There is a tremendous urgency for certain pieces of equipment, particularly those that are being utilized in Afghanistan; and for others, simply because of the age and of the wear and tear on this equipment. We are moving to replace them systematically.

Senator Dallaire: It used to be called rust-out. Regarding the capital program, whether in Afghanistan or not, you will need it in any other type of operation because there is no more classic peacekeeping chapter 6.

What are the funding savings, both incrementally and within the department, once you pull out of Afghanistan? What savings will you have to move on to other programs both outside and within DND?

Mr. MacKay: You are right in suggesting that there will be other missions. In recent years, the Canadian Forces have continued to demonstrate their capability as a deployable force. The addition of the C-17s, the new Hercules fleet of air transport aircraft, the Chinooks, and some of the upgrades that we have made to the Griffin helicopters, will be of use for both domestic and, in some cases, deployed operations. We saw that in Haiti, senator, where, in a short turnaround time, because of the size of those transport aircraft, we were able to build an air bridge to Haiti and, in some cases, through some of the Caribbean countries. We were able to get there extremely fast and to have the maximum impact. It still comes back to the professionalism of the men and women flying those planes, delivering that aid, and having the impact on the ground. However, the equipment, as you know, must be reliable and must maximize the protective capacity when they are there, particularly in a combat operation. Their own personal protection kit has been upgraded in recent years as well. That package makes the Canadian Forces more flexible, more deployable, and more able to respond to both short- and longer-term crises when called upon and do a full spectrum from combat, to humanitarian, to training. That equipment puts them in a class that is unrivalled in most parts of the world.

Senator Lang: I would commend the Canadian Forces for what they have done in Afghanistan and what they have attained compared to where they were 10 years ago. As a Canadian — and I believe I speak for all Canadians, we are all proud of the Canadian Forces and what they have achieved, as well as the support that the Government of Canada has given them.

I want to look for an overview from you, Mr. Minister, in respect to Afghanistan, and the fact that the Americans have increased their troops but have stated that they will bring the number of troops down towards the end of 2011. The Dutch are also looking at withdrawing. There are a number of countries, not just ours, looking at either totally disengaging or disengaging in part. Can you give us an overview of how you see things in Afghanistan in 2011?

Mr. MacKay: I will try to be brief. As you know, we are seeing a tremendous surge from both the American forces and from other countries as well. In fairness, NATO — and I know Senator Nolin is a close follower of all things NATO.

Senator Nolin: I have a good question, by the way.

Mr. MacKay: Yes, I thought you might.

We have seen incremental increases from other countries as well, but predominantly American forces now coming into Regional Command South. As you have referred to it senator, I say with pride that the Canadian Forces have held the fort in arguably the most difficult, challenging part of Afghanistan. I am referring to that area of operations, the Pashtun dominated area that the Taliban consider their homeland. Canadians have been instrumental in protecting Kandahar City and neighbouring regions like the Panjwaii district, and others. For the size of our troop presence there and the size of that territory, they performed magnificently.

Now, to come to your question, 2011 is not an arbitrary date that was pulled out of the air. There have been two extensions in the Parliament of Canada that involved a vote amongst all parliamentarians. The current parameter of the length of the mission was determined by a vote in Parliament. In July of 2011, we will begin to draw down, as other countries have and as other countries will.

That is done and has always been done in anticipation that Afghan national security forces, army and police, will do the job that we do. Canada has also been at the forefront in terms of training — that is, with the Operational Mentoring Liaison Team for both police and army — in giving them the capability, the expertise and the professionalism to provide their own security for their own sovereignty and protection of their borders. It is a monumental task.

I was at a NATO meeting quite recently; where I would share with you that the progress is remarkable in terms of the Afghan national security forces' capabilities and growing capabilities. Will that meet all of the problems and challenges by the year 2011? It will not happen. We will be a long way down the road, as we are a long way down the road from the chair's initial question, from where this mission began, and particularly in the southern region of Afghanistan where the firefights were most prominent and where citizens were most at risk.

Having said all that, Canada is keeping faith with the investments and, most notably, the sacrifices that have been made throughout this mission. We are obviously doing more than combat. We have made tremendous strides in other areas of humanitarian relief and development and reconstruction. One only needs to look at the roads, the bridges, and see the power on in some small villages. Senators, one needs to fly up the Arghamdab River, where you see that huge project, the Dahla Dam, and the greenery growing around the waterways; or to think about the number of children immunized against polio or educated; and women's rights improving, to realize the strides that have been made. Education has been the hallmark of the future for Afghanistan and progress is being made on the governance side, which we are all very much focused and seized upon.

Yes, there are real, tangible improvements that we have contributed to, but there is still much more to do. Reports as recent as this weekend tell us that it is still a very volatile country.

The Chair: Mr. Minister, if you do not mind, can you explain whether we have had direct or indirect appeals from our allies to stay? We see some of it in media reports, but has it been any more direct than that?

Mr. MacKay: Yes, there have been direct requests, most notably from the government of Afghanistan. Clearly, we are there with all of NATO countries, but many others that are participating in this military mission, and then more still participating in the broader parameters of this mission, namely, the humanitarian and the development side.

Yes, they want Canada to stay, because we are very good at what we do, and we are admired. We are in a category unto ourselves, as far as the respect and admiration that is felt. We have no colonial or conquering past in that country. The Canadian flag, the Canadian brand and, most of all, the Canadian people, are in high demand in Afghanistan today.

Senator Banks: Admiral, I am very glad to see the curl on your sleeve. That is a nice addition and we are all very happy about that.

Mr. MacKay: I could not agree more.

Senator Banks: Mr. Minister, I cannot think of a more irrational way to arrive at a decision of when to leave a fight than a parliamentary debate, arriving at a parliamentary decision. That decision should be yours and the government's, and not Parliament's. It is completely irrational. One might as well say that the city council will have a debate and determine when the fire brigade will be brought home.

Senator Meighen: That is just one branch of Parliament.

Senator Banks: That is true. Mr. Minister, you and I were both members of a committee that looked at the question of security and intelligence. Whether the forces are involved in humanitarian, foreign, domestic or hard fights, the thing that is most essential to their doing the magnificent job they do so well is security intelligence.

Minister, you and I were part of a committee that examined that question and looked at the possibility of putting into place parliamentary review or oversight of the matter of security intelligence. We went to the capitals of all of the four-eyes, colleagues, and found that Canada is the only country that does not have some kind of legislative review and/or oversight. Some have too much, some have too little, but we are the only ones that do not have any security intelligence. I am wondering whether you are of the opinion and whether your government is entertaining the possibility of putting into place parliamentary review or oversight of the business of gathering, processing and making use of security intelligence matters.

Mr. MacKay: I recall fondly those days when we examined this important issue. Certainly, the gathering and use of intelligence remains an extremely important preoccupation of the Canadian Forces.

In the context of your question, in recent days we have seen a coming together of all parties, with the exception of one, to look at confidential documents, which I believe certainly, opens the way to perhaps a broader and a permanent committee that would be tasked to do what you have described. I say this in the aftermath of recommendations of the Air India inquiry, and certainly with the hard lessons learned in Afghanistan and in other parts of the world where intelligence gathering can be life altering. That intelligence gathering can allow us to react pre-emptively in some cases, to do the right thing for our citizens and those in other countries whom we protect.

There has been a tremendous amount of information gathered by the exercise with which you and I were a part available to Parliament and many models around the world, not just within the five-eye community, but also within other countries.

Much of the success in counterterrorism efforts from any government because of the nature of our democracy requires cooperation. It requires some modicum of understanding that those who are tasked with both the handling and dissemination of confidential information do so with the utmost care and caution. As we have seen, this type of information, if misused or misplaced, dare I say, can have a devastating effect.

To that extent, I think you will see current and future governments looking at this issue further with a mind to determining how we provide that type of assistance to our security gathering branches. Present and future governments will seek to provide assistance and oversight that might help ensure that this information is properly handled. It must be properly handled to respect privacy laws but never stray from the fact that this information, in the case of an operation like Afghanistan, if in the wrong hands, can have devastating effects.

Senator Segal: Minister, I think we are going through a two- or three-year period that may be the most robust period of successful military procurement since World War II. I want to congratulate you and those who have been supportive of that undertaking. I know how important it is. I know how many person years are required from the operating services to design the specs, get them out and move them ahead. I think all Canadians are grateful for that measure of success.

I want to ask you a question about overall sufficiency. We heard on many occasions from the former Chief of Defence Staff that we did not quite have the combat capacity person for person that the Toronto police force had in its policing capacity. We heard that we would not be able to fill, in terms of combat-ready individuals, back then, Maple Leaf Gardens. We have also heard that our constraints as a country in terms of where and how we can deploy is understandably affected by the size of our force.

You spoke earlier about a 70,000 regular force and a 30,000 reserve force, and those are the best numbers we have seen in many years. The larger question is, is that sufficient for a country that has areas of influence, areas of international interest in many parts of the world as diverse as the South China Sea to the gulf to our own hemisphere? We have responsibilities in terms of aid to the civil power, which may or may not be occasioned by adjustment to climate change issues. We have disaster relief, humanitarian relief, plus the need to have a deployable combat capacity, air, sea and land. There has been some talk about setting a goal before our one hundred and fiftieth anniversary as a country of 150,000 troops, 100,000 regular and 50,000 reserves. I understand that is the kind of serious policy decision on which you cannot freelance at a committee, and I would not ask you to do that. However, I am interested in your perspective on whether, overall, our needs as a country can be met with the 70,000 and the 30,000, as you described earlier. Do you think we have to at least be open to a discussion about what capacity requirements may be necessitated by the nature of our country and the nature of our obligations, both alliance and otherwise, going forward.

Mr. MacKay: I thank you for your very insightful comments on this subject. I believe that the number we have arrived at of 100,000, the 70,000 regular forces and 30,000 reserve forces formula, came about after an examination of what are known as the four pillars of the Canadian Forces. Much of the growth that we are experiencing right now — I will come back directly to your question — is based very much on the support of infrastructure and the readiness and equipment needs of the forces. I suggest to you that they have to grow in conjunction with one another. To invest solely in one or any lesser number of those pillars can create unforeseen challenges. You grow the size of the force very much with a mind to equipping them and providing the necessary support of infrastructure for their housing, training and their capabilities. The backdrop of this is our readiness, our ability to deploy, as you said, our ability to participate in international missions, in humanitarian missions and the type of disaster relief we saw in Afghanistan, and we have seen in Jamaica and other parts of the world.

I want to say this has been not only an unprecedented period of growth in terms of our equipment procurement, but in terms of the involvement of the reservists. What an incredible contribution reservists make to the Canadian Forces today. There are times in which in the last 10 rotations of soldiers going into Afghanistan, we have had upwards of 20 per cent to 25 per cent of the participants coming from the reserve forces.

These are men and women who are school teachers, doctors, lawyers, your next door neighbour, your hockey coach, who train rigorously; and when they deploy into Afghanistan, they are like any other soldier. As one soldier remarked to me, there are no cap badges on helmets. When they are in a theatre of operations, the expectation, the readiness and their abilities are judged the same.

On that note, we will have within our ranks, upon the completion of the mission in Afghanistan, combat-experienced veterans, veterans as young as 19, 20 and 21 years of age coming back from a very rigorous theatre of operation. That bodes well for the leadership within the Canadian Forces.

We should never lose sight of the fact that these are veterans, veterans not unlike those we have seen in previous missions from our country's very origins. That brings with it a whole new, renewed set of obligations and responsibilities from our country and from our government.

As to the exact number in the future, I think this will always be an issue for discussion, an issue to be weighed against the requirements to protect, first and foremost, our own continent and our own country — what General Natynczyk calls "the home game." Our ability to contribute internationally, of course, is also of great importance. That requires a great deal of measurement against being overextended — our equipment, our ability to get there, which has been enhanced by these new transport vessels and will be further enhanced by investments in the navy. This is all done in very close consultation with those most in the know, which is our leadership within the Canadian Forces across the army, navy, air force and our special forces.

The numbers of reservists is adjusted from time to time, based on the tempo. We have been in an extremely high tempo in the past two years. I hope that answers your question.

Senator Nolin: Minister, it is always a pleasure to have you here. I want to go back to the North Atlantic Alliance tier. One of the ongoing challenges of all the NATO member countries is the collective, and I should say comprehensive, financial support of the endeavours of the alliance. I know it is not a secret that you and your Defence colleagues met in Istanbul in January of this year. During that meeting, you were presented with the difficult reality of a financial deficit, driven mainly by the Afghan operation.

It was troubling enough for your colleague, Secretary Gates in the United States to ask for change to be adopted even before the new strategic concept next fall. Can you update us on the status of the causes of the deficit, both in operations and infrastructure? What can we hope for in the future? We will have to front the money to cover that deficit.

Mr. MacKay: We had a very frank discussion in Istanbul. Not only Secretary Gates, but I think all defence ministers and participants were somewhat taken aback at the size of the operational deficit of NATO.

Senator Nolin: If I may, Mr. Minister, I understand that the Secretary General was probably given military orders to come up with solutions.

Mr. MacKay: I think that is a fair description. Secretary General Rasmussen left that meeting and has attended subsequent meetings with a broad-brush stroke plan that includes making the necessary tough fiscal decisions.

If there was any message given and received by the Secretary General, it was that we have to change from a Cold War posture that involved both the investment and upkeep of a lot of infrastructure around Europe. His message was to look at emerging challenges — some of the aggressive and sometimes non-state actors who pose the greatest threat to international security. We have to examine some of these albeit politically challenging issues around things such as missile defence on the continent of Europe.

I am always very quick at NATO meetings, given the opportunity, to remind participant nations that it is North America — or south Canada, depending on how you want to phrase it. The participation of Canada as a founding nation of NATO is a point that we have to repeatedly stress. There are 100,000 Canadians buried on the continent of Europe as testament to our commitment to global security.

As I know most senators have, I have on occasion visited some of the Commonwealth grave cemeteries. It is a truly moving, remarkably Canadian experience when you see just how real that commitment has been.

I will share briefly with you a conversation I had with the Dutch general who was part of the regional command rotation in Afghanistan. The Minister of Veterans Affairs and I were in theatre visiting, and the general said I am very often asked — I come back to Senator Lang's point about Canada's contribution vis-à-vis others — as a Dutch general, why are young men and women from the Netherlands in Afghanistan today? He said I always answer the same way; why were Canadians in our country in 1944? There is a real continuity within NATO and within our allies, and recognition for what Canada does.

There is financial reform under way. With respect to the strategic concept you have mentioned, we have received input from learned individuals, like Madeleine Albright, with recommendations as to how we tighten up and bring about greater efficiency in determining in which missions NATO should be involved. For example, how to improve partnerships with the European Union, how to determine greater efficiencies within the organization itself in terms of the internal operations of headquarters, but also in sharing resources and decisions around AWACS and other deployable equipment. There is a tremendous recognition of the importance of reform at NATO, as well as the keeping open of the door.

One last point is that there are member nations now of NATO, like Croatia, who were recipient countries of NATO forces, now contributing in Afghanistan today. That gives us all hope. That is not to say that Afghanistan will be deploying anyone soon, but we are making the type of investments and recognize that the improvements do come about with tremendous effort and sacrifice.

Senator Meighen: I will forego the usual words of welcome, as you had them from other, more eloquent members of the committee, but I feel the same way, minister; thank you for being here today.

On humanitarian and development projects in Afghanistan, many of us have had the opportunity to be in Afghanistan on a number of occasions. I think we were struck by a couple of things, one of which was that not a heck of a lot of the aid was getting down to the ordinary Afghan. The aid that was getting down was the aid provided directly by our Armed Forces, who were able to spend some money that had been allocated to them to dig wells, repair schools, et cetera. However, there were some serious questions about the big, signature projects.

From what I can establish, I think they are going better now. The Dahla Dam is under way, as are other things of that nature. Can you confirm my understanding that, right now, aid and development workers in the field require military protection? Am I right in saying that?

Mr. MacKay: Yes, they certainly do.

Senator Meighen: Can you give me an estimate, post December 2011, whether that requirement will still be in full force and effect, or whether it will be substantially diminished?

Mr. MacKay: Given the current climate in Afghanistan, while we are all hopeful and somewhat optimistic, we hope that we will see the violence diminish as we come through this fighting season and into next, and we will see a greater ability to control a larger area of responsibility in the south that would allow for more reconstruction and development.

I would suggest that we will continue to require security around many of these projects. The Taliban has a very insidious habit of coming back and destroying schools, blowing up bridges and infrastructure and generally doing their best to intimidate people and wreak havoc amongst the local population.

One of the more successful initiatives I have seen and which I suspect you have as well are efforts made to hire local Afghans to perform the work. That accomplishes a number of things. If they are involved in building projects, they take particular pride in protecting their own community and their own infrastructure; they have invested in those accomplishments. It also pays them to do something other than picking up a rifle, involving themselves in the making of bombs or doing something that they are receiving pressures from forces within the Taliban to do.

Those efforts will require continued security. There are ongoing discussions as to how we might be able to maintain some of this work post 2011. You would know there are a number of countries doing developmental work only, without their own forces. There are arrangements and contingencies being explored.

Senator Meighen: They are doing them under the protection of military forces, are they not?

Mr. MacKay: Absolutely they are. However, it is a multinational effort. There are countries that will provide that type of protection for those countries not there in a military fashion.

Senator Meighen: When do you think you will hit 100,000 in the Canadian Forces?

Mr. MacKay: The time frame is 2028. At the rate we are growing, we could hit that number much sooner. We have a waiting list to get in the infantry. There are certain stressed trades within the navy, in particular, where we are actively recruiting. With the change of the posture coming out of Afghanistan, there will be greater emphasis to return some of the positions to regular force members that are currently filled by reservists.

Back to Senator Segal's point, the Canadian Forces have grown at an exponential rate in recent years, and there is tremendous interest in the country to be part of this storied organization. It will pay for your education. It will provide tremendous career opportunities and great challenges, both personal and professional. We will be well ahead of recruitment and retention numbers, given the current enlistment we have seen in the Canadian Forces.

Vice-Admiral Denis Rouleau, OMM, MSM, CD, Vice Chief of the Defence Staff, National Defence: That is fair to say. We have 68,000 now in the regular force and that was our target for 2012.

[Translation]

Senator Pépin: I want to thank you for what you are doing for military families. I urge you to keep up the good work. Because Canadian Forces members are younger and younger, so too are their families.

I just want to mention, if I may, the fact that daycare services are in short supply on all the bases, but my question is about something else.

We realize how important it is to improve cooperation between Veterans Affairs and National Defence. Certain dysfunctions will complicate the transition from military to civilian life, and some members of the military are apprehensive about the very idea of becoming a veteran.

On June 17, you responded to a report by the House of Commons Standing Committee on National Defence. You said you wanted to find ways to better align Canadian Forces and Veterans Affairs Canada services so that personnel who are releasing from the military experience a smooth transition from Canadian Forces management to management under Veterans Affairs Canada.

What will help these two departments work well together to ensure that released soldiers experience a smoother transition? What initiatives have you taken or will you take to that end?

Mr. MacKay: Thank you very much for your interest and your work in this area, which is important to you. First of all, the departments have taken steps to work together on family matters.

[English]

The most practical thing we have seen in recent years is the bringing together of joint personnel support units, which, to use the vernacular, are one-stop shopping areas. The JPSUs have veteran services, military family services, pension issues, medical issues, mental health issues and even, in some cases, employment issues or opportunities outside the military such as linkages to the business community. That is all in one unit.

I think this would be a tremendous step forward. It is not to suggest there are not still challenges in coordination sometimes and the need to modernize certain programs. One of those which this committee has looked at involves the treatment of injured soldiers. I watched a great deal of the testimony and have spoken personally to men like Master Corporal Jody Mitic.

The current minister, the previous minister and I had several occasions to talk about how we could adjust certain programs. While it is very much in the purview of Veterans Affairs Canada, we have a vested interest and we give a great deal of input. The Vice-Admiral and other members of the Canadian Forces team regularly meet with counterparts in Veterans Affairs Canada to talk about how we adjust certain programs.

Issues on the base with respect to families, which I know are very near and dear to you, continue to be a focal point for the Canadian Forces. We also talk about how we treat people after they have left the Canadian Forces, and their families, as well. Some have felt excluded.

There are some programs in particular that I will mention quickly: The compensation for atomic veterans and the settlement with respect to those affected by Agent Orange in Gagetown. Those are just a few examples of compassionate programs for long-standing issues. Other items include child care, employment changes for spouses and issues related to employment. We have seen changes in the Employment Insurance Act, which I believe will be coming to the Senate very soon.

These are modernization steps. I wish I could say they are all happening as quickly as they should. They are moving and certainly both departments are very much seized with the urgency. We try to prioritize them in recognition of that urgency.

Senator Day: Mr. Minister, I would like you to expand on the reservist comments you made earlier. We all share your pride in recognizing the role that reservists have played. Up to 25 per cent of some of the deployed soldiers have been reservists.

We are concerned about the strategic review. Our concern is that the reserve units may be easy prey for saving funds when your choice is whether to keep a ship afloat or maintain a reserve unit.

We are hearing rumours that the reserve units have a freeze on recruiting and that they do not have the equipment that they should have to be trained properly. Could you comment on that?

After this Afghan mission is behind us, what do you see as the future for the reservists? Will they be just a backup to the regular force, or do they have a separate role to play?

Mr. MacKay: The reservists, as you know, throughout our country's history, have been a tremendous source, not just for call up but for preparation for future missions. They have been, in many instances, a source of regular force support. I am sure you are aware that we have now made changes to allow people to go from reserve to regular force and back, to re-muster in a much more efficient fashion that allows for speed of transfer, if you will.

The reality is that we have seen an unprecedented operational tempo in recent years, internationally and domestically as well. In the absence of the numbers of regular force that are needed to fill the various posts at home and abroad, we have drawn heavily upon the reserves, particularly in Afghanistan, as we both mentioned. That will change again. The very nature of the reserve task, if you will, is to be able to adapt to that operational tempo, to be called into action when required, and then some of those positions will be forfeited to regular force when they come back. We recognize that is coming, and we are trying to adapt or transition to that reality without having too harsh an effect on the training regiments or on the supplemental income that comes from being a class A, B or C category within the reserves.

That is all being done in examination of the larger budget pressures that are simply the reality of running a department of this size. We do that in regular consultation with the leadership of the Canadian Forces, recognizing that the reservists themselves, in many cases, do much of the training I do not want to say on a volunteer basis, but there is such tremendous enthusiasm for what they do. In many instances, they are literally out of pocket because of the commitment they demonstrate to the training regiment, and to travel, in many cases, as they do. We try, to the best of our ability, to compensate them fairly in that regard and to recognize and, in fact, encourage that type of enthusiasm. We also encourage them, should they choose, to join the regular force, if that is in their career plans.

With the navy, because of the shortages that we are facing, I can assure you there will be no cuts to the navy reserves whatsoever, this year or next.

With the high tempo and the pressures that have been on the regular army force that has been buttressed by the reservists, there will be a change. There has to be. When we bring approximately 3,000 soldiers out of a theatre of operation, they will go back to many of the positions that they held on the bases. They will fill many of the roles that are currently held by reservists while they were deployed.

Senator Manning: I am delighted that you are here with us today and with the information that you are passing on. I will take this to another side of your portfolio, and that is the recent announcement on the National Shipbuilding Procurement Strategy. This is of great interest across the country, as I know you are fully aware. There has always been a concern in the past about the cycle of shipbuilding — the boom and the bust cycle we have heard about from witnesses. We are hoping this new strategy will at least give some type of level playing field over the next number of years, which leads to my question about a level playing field.

We have had a fair number of shipyards in the country not survive over the past number of years, as well as many companies that provide the equipment to the shipyards. Could you elaborate about what this strategy will mean to the country, and especially to shipyards and the employees who work in them? Some people may think that the larger shipyards may be able to take all the opportunity that is coming, and that is not necessarily the case from what I read.

Mr. MacKay: Thank you very much, senator. I will be brief, madam chair.

The national ship building strategy does identify two large shipyards for the purposes of builds that would be 1,000 tonne displacement or larger. We are talking about surface combatants, things like destroyers and frigates, Arctic operations vessels and icebreakers. Non-combatant ships that are larger will also be built in one of those two centres of excellence. There will be a competition to decide where those two centres of excellence will be located, and there are obviously a number of contenders.

However, to your point, there will also be a lot of work done on smaller vessels, somewhere in the range of 100 plus smaller vessels, medium and smaller vessels that are required by the Coast Guard, for example. Given the size of our coastline, those vessels will be very useful in that department and others. That work will not take place in the two larger shipyards or centres of excellence. It is strictly envisioned that it will not. That is good news for smaller shipyards around the country in places like Newfoundland and Labrador where they have a great deal of expertise.

You are right in suggesting there has been this continuous boom and bust cycle. The last time we were really into it in terms of building ships was back in the late 1980s, early 1990s when we produced the current fleet of frigates. One of the two shipyards that worked on those frigates is now closed; it no longer exists. They have moved operations from St. John to Halifax.

There will be $35 billion invested in this national shipbuilding strategy. There will be upwards of 28 or 30 ships built, plus these smaller vessels of 100 or more. That work will happen in many of the smaller shipyards. I do not want to exclude for a moment Ontario or Quebec from this equation. Many of the on-board equipment and weapons systems are not necessarily made in shipyards. Tremendous technical investments will come with this national shipbuilding strategy, with huge work hours associated with the building of these vessels from steel workers, electricians and welders. This will be one of the largest single investments in what I deem to be an important industry since the building of the great railroad. This huge, national project will bring great economic advantages and great capability to the Canadian Navy. In what better year? Yes, symbolically it is important to have the executive curl, but what the navy wants are new ships.

The Chair: Thank you very much. I appreciate you staying beyond your time so that all senators would have a chance to question you. Mr. Minister, thank you for what you do. I, too, have had the benefit of travelling with you and knowing how much the troops respect and appreciate your work. Thank you for that, and thank you for being with us today.

Mr. MacKay: Thank you all, honourable senators, and thank you for the work you do. I highly commend the eighth report on Afghanistan to you in terms of the progress and the positive things we are seeing as a result of this whole-of-government approach.

The Chair: We have already read it.

We will take a short break for just a few moments and reconvene in camera.

(The committee continued in camera.)