Proceedings of the Standing Senate Committee on
National Security and Defence

Issue 7 - Evidence - Meeting of October 18, 2010

OTTAWA, Monday, October 18, 2010

The Standing Senate Committee on National Security and Defence met this day at 4:05 p.m. to examine and report on the national security and defence policies of Canada (topic: the state and future of the Canadian Forces Reserves).

Senator Pamela Wallin (Chair) in the chair.


The Chair: Senators, welcome. Today, we continue our study of the Canadian Forces reserve. As Sir Winston Churchill said in reference to the members of the reserve, they are "twice the citizen." I think those words still hold true, as we have heard so far in our testimony and as we have seen in Afghanistan and at the Olympics and the G8.

Our first witness today is Dr. Richard Weitz, author of, among many things, The Reserve Policies of Nations: A Comparative Analysis. The Strategic Studies Institute of the United States War College published this analysis in 2007. Dr. Weitz is a senior fellow and Director of the Center for Political-Military Analysis at the Hudson Institute, a non-partisan policy research organization. Dr. Weitz is also a non-resident senior fellow at both the Project on National Security Reform and the Center for New American Security.

His list of credentials is very long — Institute for Foreign Policy Analysis, the Defence Science Board, the Center for Strategic Studies, and the United States Department of Defence. He has a BA from Harvard and two masters' degrees, one at the London School of Economics, the other at Oxford, and did his doctorate at Harvard. He is widely published and a leading specialist in defence journals.

We welcome you Mr. Weitz, because, if I read your work correctly, you comment that we are in the middle of a global reserves revolution. We are pleased to hear from you today.

Richard Weitz, Director, Center for Political-Military Analysis, Hudson Institute: Thank you so much for inviting me. It is a great honour to appear before the Senate, and particularly before the Senate of a close ally such as Canada, which we all admire, particularly the tremendous sacrifice Canada has sustained in Afghanistan against the common threat.

I want to make clear that a colleague of mine, based here in Canada has contributed some of the analysis on Canada. Lauren van den Berg specializes in international security affairs. She is in her final year of a master's in public policy. I encourage you, if anyone needs a good aide, to grab her before someone else does. She is at Carleton.

I also want to extend an offer to come join us at Hudson, in case you happen to find yourself in Washington. We can arrange so you can meet with think tanks and get a different perspective on some of these issues. The Hudson Institute is a five-minute walk from the White House and we are close many other institutes as well.

The Chair: We will be taking you up on that offer very soon.

Mr. Weitz: As the chair pointed out, what we are seeing today in Canada and the United States and other countries is a global revolution in how countries are dealing with reserve affairs. Each country differs a bit in its constitutional principles, histories, economic and human resources and perceived threats, but generally, what we are seeing is more reliance on the reserves. We are seeing more reliance on the reserves for a series of common reasons, much more in the past decade and probably in the future, than previously.

As you know, through the Second World War and much of the Cold War, the reserves were seen as a strategic asset. They were meant to be available for the big war, against either the Soviet Union or whatever. At that point, you would mobilize the million people, recreate D-Day, the Second World War, if the Soviets over-ran Western Germany or whatever campaign you imagined. It would be a massive campaign. You would have time to call them up, spend a year training them, equipping them and sending reinforcements.

Clearly, that is not appropriate for the kind of world we face today. The threats are diffuse, contentious, frequent, and require many of the skills that you would think civilians could bring, especially complex counter-insurgencies, post-conflict reconstruction, and a stress on averting conflicts by preventing the sources of internal tension that caused them. All those are assets that reservists can arguably bring much more easily to the battlefield than the traditional military.

What you have seen is militaries adapting in various ways. Most commonly, under this Total Force concept, which Canada has adopted, as well as the United States and other countries, the idea is you treat the active and reserve components more similarly. It can include pay, organizational structure, treatment benefits; you want to make it so there are fewer differences so you can quickly bring up the reserves. They would be more ready trained and have better equipment. You could plug them into whatever active components are in the field and have them work together as an integrated whole. This concept is developed further now. We speak of "whole government," which is another concept that both the United States and Canada are approaching, trying to bring in the whole inter-agency to deal with these complex problems.

This has not been, however, without some challenges — in particular, the question of what assets you want to keep mostly in the reserve component and which you want to keep in the active. For a while, there was a tendency, at least in the United States, to have a division of labour. For example, some of the medical specialties are very technical and civil affairs, military police, is often civilian. That worked well in some ways because the United States had adopted this Abrams Doctrine that said if we were going to war, we would make sure we involved the reserves. Therefore, you would not get involved in another conflict like Vietnam, where there was not popular support.

However, it also caused some problems for some of the early crises where you want to have forces in right away; you cannot even wait a few weeks. They are having difficulties balancing where they want to keep organically in the active and what in the reserve.

One common field you have seen in many countries, both in Canada and the United States and elsewhere, is to have the reserves focus on domestic threats. With the rise of terrorism in particular — potential catastrophic terrorism — you have seen a lot of countries working on equipping the reserves to deal with weapons of mass destruction-type threats. As we learned in Hurricane Katrina, you also have to have good reserves to deal with natural disasters. Canada knew already.

This is the current case in many countries and it makes sense. They are located in the community; they know the situation well and they often are first responders. However, this raises the problem of what happens if you want to draw on the same person to be a first responder and a reservist, to mobilize them further to active duty? That is just one complication.

One of the most serious complexities that Canada and the United States are dealing with is the problem of costing this out. It used to be there was a clear division. Reserves cost a lot less. They were not mobilized, but they were less ready and therefore if you wanted to keep many people around in case you needed them, it was good. However, that has changed.

If you are going to use them as an operational force, you have to morally treat them as if they were close to active duty. You have to give them all the benefits — health care, higher pay, education; whatever you are giving to the active corps, you need to give to the reserve component as well.

This raises the question of cost. Is it more advantageous to continue to rely on reserves to save money, or do we need to put more in the active? The U.S. government has not figured that out. There is a major study going on, which is supposed to be complete by January, to determine the costs. Depending how you look at it, there are a lot of opportunity costs involved in bringing reserves away from their civilian employment but then they bring certain benefits back.

The question of the employers is important, at least in the U.S. We have had problems with people trying to circumvent a law that requires people not to discriminate when hiring a reservist. There is to be no discrimination when the reservist returns to his or her place of employment. Canada does not have this law and I am interested to know whether this has worked satisfactorily.

Finally, we have seen governments following various innovative approaches, not all of which are applicable for different societies. Britain, for example, has tried to select out a certain group of reserves, give them resources, and treat them almost like an active component. They have another less active group of reserves that cost less to maintain but as less well trained.

There has been a lot of opposition in the U.S. to that the whole concept of tiered readiness. The argument is that the governor, if there is a domestic crisis such as a hurricane or something, needs to have the asset readily available. However, the federal government often pays for this service. Therefore, it is becoming very much a federal issue as well.

I am happy to discuss this with you further and eager to answer your questions.

The Chair: Thank you very much. We have done the whole question of rules and requirements for employers on a provincial basis; some of the provinces have adopted it as opposed to it being a national strategy.

I have two quick points. Is the study you were talking about, which you thought would be due in January, from the Department of Defense?

Mr. Weitz: Yes, the quadrennial status review was supposed to look at the question of reserves. They sort of punted because they could not figure out the costs, which is the key issue. Therefore, they said there is now a separate study in the Department of Defense, which is being undertaken by the Office of the Secretary of Defense and the services. There is some governor involvement, as well. They are trying to figure out what costs of the reserve component.

The Chair: We will look for that study.

Mr. Weitz: It should be insightful because it is a complex effort that has taken a major commitment on the part of the federal government to try to sort it out because of the components involved. It is something you would want to build on if you could.

The Chair: When you talked about Total Force concept, is there any country in the world — given your study — that does not do that or who has a case against it?

Mr. Weitz: No. Some countries might manifest that in different ways, and some go further. There is conscription in Germany, which might be fading out. For the longest time France had that. The Chinese, the Russians and most of the major powers do it.

The Chair: So it is the current frame, is it?

Mr. Weitz: Right. There are too many valuable assets residing in the reserves in terms of civilian skills, manpower and resources to want not to take advantage of them in any way possible.

Senator Dallaire: The Total Force concept appeared in the early 1970s, and has been applied in a variety of fashions, such as creating mixes units of regulars and reserves and so on. That has swayed, depending on budgets and operational tasks.

We are into this current era and as you are indicating, the reserves could be doing national homeland security tasks. In the 1960s, if you remember, the reserves in this country were on national survival, which was to train in case of nuclear blasts. They did all the ladders and ropes, which was catastrophic to their operational capability.

I get from you that the reserves should no more be considered a mobilization base as such; they are more a ready component at a potentially different level than the regular force, and augmenting it.

Do you have a set philosophy with regard to their being permanent part-time or temporary part-time reservists versus simply reservists in armouries that can be called up but that are maybe on the books as part of integrated units, or operational units, which form a battalion or a company in a formed unit? Do you have that articulated?

Mr. Weitz: There are two factors coming into play in that regard. One, there has been an effort in many countries to do away with lower tier forces: A cadre group or people who meet two weeks a year and over the weekend. It has been found that they cannot deal with the kind of immediate confrontations that you want now.

Perhaps more importantly, in terms of deciding if you want a person in reserves or full time, it is often a function of personal choice. The department in the United States has been trying to allow people to switch lanes throughout their careers; they can be in the active lane in the active component for a little while. Then they can go in reserves if they want to raise a family. That holds true for men and women, if they want to spend some time at home. There are some skills, such as IT and computers, which is way ahead of what is happening in government and will probably remain so. Therefore, it is better to have people who do that for most of their career and are available for the government if we are a cyber attack, or instance. You want to have them right away because you want them to solve the problem and therefore, you have to keep them somewhat integrated.

The services have experimented a bit with what they call associate status, which started in the air force, and it spread. In this situation, the active forces and reserves get together and rain together. They have the same base and are integrated under the same pay scale, administratively. It has worked in some areas and not in others.

Like the United States, Canada has the federal question, in which you would also want to ensure some people spend a lot of time in their communities and are heavily integrated in their communities. They have full-time jobs such as mayor or they are on the police force or fire department, so they can serve as that important transmission function between civilian values and the military.

That is becoming less of a problem for most countries over time in the sense that a lot of the barriers have broken down. Military personnel often get married and have families; they are not all males, and so on. The function can be important for a federal group but you want to ensure people have a different sense of what is happening in the different regions and they can bring that to the federal meetings in Washington or in Ottawa or elsewhere.

Senator Dallaire: The Marines have three full-time divisions and one reserve division. However, the reserve division has 20-odd per cent of regular force in it and they deploy it as units. The army has some sort of thing like that. I am not sure about the air force and navy; I do not think there are naval reserve ships in the U.S. navy.

Mr. Weitz: There are not enough ships to do that, right.

Senator Dallaire: The context for each of the services is different. Does that create a problem in trying to come up with a policy for how you want to use your reserves? They are not a mobilization base anymore and you want them to be integrated, I gather, into ready operations. Have you seen between the services policy frictions in trying to identify how to use the reserves and the parameters of their employment?

Mr. Weitz: It is not so much an issue of using them because there are enough authorities. Now when you join the reserves, there is an expectation you will serve in a mission, previously in Iraq and now in Afghanistan.

It has become a big problem to deal with the effort of having to treat reservists equitably, no matter what service they are in. Ideally, they would want to have one pay system for everyone. However, if reserves are different in each of the services, they have to back off on some of the department initiatives they are making to have uniform pay, personnel or other rules simply because they were different.

It has become less of a problem in terms of employment than it is in some of the other issues, like administration and equity treatment. They are trying to find a balance in terms of what extent they want to have department wide initiatives to treat everyone and then what to allow the service to have some discretion over.

There is another level I think will probably be a problem for Canada because it seems to be common for most democracies. There is a question of how you treat the military personnel and the civilian personnel who are not in the military; a foreign service officer, an aid worker or an agriculturalist sent off to Afghanistan. These people need to be treated appropriately. We have a unique problem with the contractors: it is often more advantageous for a person to quit the military, work for a private contractor, be paid three times as much money and not have to worry about many of the rules and losses that confine the military.

The Chair: It is not unique to the U.S.

Senator Lang: Thank you for appearing today. I refer to the book you authored in 2007, The Reserve Policies of Nations: A Comparative Analysis.

In your study, with the ever-changing technology, especially in the industrialized war machine, did you find that fewer reservists are required because those changes in technology have resulted in less being demanded of them or is there an increased need for reservists overall?

Mr. Weitz: You can get the book by going to the Strategic Studies Institute website where you can download it for free, as well as all of their studies. Help yourself.

We have found that almost universally, there has been cutback in the size of the military's active force and reserve force. You need fewer people because war is less a question of mass attrition than it is of smart weapons. For that, you want fewer, better-skilled people.

In a way, that would incline you towards the active component because you can train to have full time soldiers. Some of the skills that are particularly valuable for the conflicts we are in today are more clearly developed in the civilian world, where the reservists would have the advantage. Some of the best people we have had on the PRTs, for military police, civilian affairs, post-conflict reconstruction or making a sewer work in Afghanistan, are more likely in the reserve component than in the active component. Again, it is generally speaking because everyone brings unique skills. Some of it is information technology.

The Chinese, as far as we understand, have a large number of cyber warriors who are almost all reservists or in the civilian world. They can train and be up to speed to engage when needed, while not necessarily being traced back to the government because they seem to be from some group or other in a city in China.

It probably varies with skill. The U.S. government is trying to be more open about how it allows people, in particular in the cyber area because the government realizes it is hard to get people to join the military full time. Perhaps you can work it out with a deal with Microsoft and service reserves who can contribute to both the larger community and Microsoft by doing what they need to do. It is probably true of some other skills as well. There are two conflicting forces at work.

Senator Lang: That leads us to Canada and, in the not-too-distant future, the United States of America with respect to Afghanistan and the commitment to the war footing.

From your perspective, with Canada playing a part but not being actively on the ground, so to speak, should we maintain our reserves in the current way or should we redeploy ourselves within the military as we reassess our situation? Obviously, the theatre has changed dramatically.

Mr. Weitz: This often does not occur but ideally you would want to have the government tell you what your goals in the world are, what roles the military play in helping to accomplish those goals and working back what strategy will help to achieve those objectives. You then see which active and reserve components can fill the kinds of skills required to do that.

Think about what role Canada might want to play in the world. Ideally, there would not be another Afghanistan or Iraq situation. Secretary Gates has said that we do not want to do such a mission again if they can help it. Canada has a long history of a leading role in helping to avert conflict and in helping with post-conflict reconstruction. There might be African countries where you would want to help with recovery from genocide, for example. You still want to provide security to the people you would send over.

More broadly, there is the North American defence component to which Canada and the U.S. are closely tied. You would want people who are knowledgeable to deal with home-grown terrorism threats as well as missile defence, if that is a concern. In non-proliferation issues Canada has always played a leading role, so you want technical people.

You can make an argument either way as to whether you will find the expertise in the civilian world or in the military. You probably want some military personnel. As the previous senator pointed out, even some of the all-reserve units have some members on active duty because there is a need for someone to maintain the structure and prepare the pay and so on.

The U.S. does not always follow this but the ideal structure is laid out in the textbook strategy on where you want to be in the world and what the small component of the military contributes to and what skills the active reserve can best contribute. As you pointed out earlier in your question, that will always change as technology changes. Therefore, you want to rebalance that continually.

Senator Lang: You mentioned the question about the law on the books in the United States that you cannot discriminate against hiring a reservist. Does the United States compensate an employer for a reservist that is called into service, apropos, I believe, Britain and France to some degree?

Mr. Weitz: You are correct in that Britain and France have a much better system. The British and the French are good at bringing about employer dialogue with the defence community. They have tried to do that.

As a general rule, it is thought to be a patriotic duty, and the threat of punishment is seen as enough. As you might suspect, it is a greater problem for small businesses. The disaster, of course, is the one business entrepreneur who gets called up to Afghanistan and tries to hand it over to someone else. That does not work. They have not found a way to solve that problem.

It is thought that the firm would incur the cost in the same way that it would incur the cost of an employer called to jury duty.

Senator Lang: There is no compensation.

Mr. Weitz: There are some loans to bridge the cost. If you were to consider that system, you would want to follow the French or British model. The Americans have advanced less along that stage because of the large number of reserves and the costs.

Senator Mitchell: I would like to follow up on that topic, Dr. Weitz. Is there some limit in the United States, Britain or France as to how long a company has to hold a reservist's position open? It is one thing to go for six months; yet another thing to go for three years.

Mr. Weitz: It is five years. On average, reservists are called up once every five years. It lasts for 30 years. The idea is that the person serves one out of six years, and they are protected until they return. A position is held open supposedly for five years, and they go off again. Basically, it is continuous coverage. As you might imagine, people try to circumvent the law. There is continuous tussle with law enforcement.

Senator Mitchell: Is it federal or state legislation in the United States? Does it encompass both private sector and public sector jobs? In Canada, it is provincial and only public sector jobs, if any jobs at all, are protected.

Mr. Weitz: Right. I can get you the name of the law because I was looking at it earlier. It was passed in 1993. This was trained to a problem right after the Cold War when we started using our reserves more and then it worsened with activities in Somalia, Bosnia and so on.

It is federal law, and it applies uniformly to the public and private sector. It is the Uniformed Services Employment and Reemployment Rights Act. It provides job protection for up to five years of activation and extends over a 30-year civilian career.

Senator Mitchell: You said the British or the French model would be the more appropriate model to follow.

Mr. Weitz: They are more generous models, but more costly.

Senator Mitchell: What kind of compensation does a company get? Does it get a grant?

Mr. Weitz: I am not sure what it is now, but in a way, many of the costs were covered. There was the possibility of obtaining a loan. In addition, an earlier effort included a letter from the secretary to hang on your door to show your patriotism. There was also an offer of moral support. That has changed somewhat and there is a move to compensate the employer more directly. If the employer is able to document financial loss, the government will cover it. They had a small number of reserves in both cases, so they could do that.

Senator Mitchell: You made many interesting points, particularly that the reserves are called out for natural disasters. There is a link between climate change and natural disasters. In fact, the American military is now coming up with policy about what climate change will mean for defence requirements, wars abroad, and so on.

Are they giving any thought to the pressures that natural disasters will put on their reserves? Are they factoring that into their thinking about climate change as well?

Mr. Weitz: For further reference senators, I had an opportunity to contribute to a book that deals with the question of the military, national security and climate change, and all their implications. That book is from the Brookings Institution.

So far, the thinking is that climate change will manifest itself in about 30 years in terms of having major impact on operations. They are telling us that we still have a chance to save ourselves if we get our act together.

The Arctic is a more pressing issue for Canada, obviously. The thinking is that it will have some effects that are predictable and some that are unpredictable. If there were a lot domestic natural disasters, then you would have to think about turning the resources more to reservists and putting in a national guard that plays a role under government control.

The thinking of the U.S. military for all sorts of reasons — moral and otherwise — is that if there is a natural disaster in Pakistan, as we have seen, or wherever else, they will go in. You must have some active duty people who are able to deploy to Haiti, for example, to help deal with that disaster as well. That is why they are thinking about the costing question of whether it makes more sense and how many you want to keep in the active reserve.

The thinking is that it will become more of a problem in a couple of decades. It is something we need to think about now but do not need to put into operational planning.

Senator Mitchell: Thank you. That is great.

Senator Plett: I want to follow up on what Senator Lang started. I have spent most of my life operating a small business. It would have been devastating for us at certain times of the year if we had had reservists and they left to fulfill their duty to the army. When someone in the reserves applies for work, is that person obligated to reveal that at the time of applying for work?

Mr. Weitz: I believe not. There is a bunch of questions that you are not supposed to ask, and that might be one of them. When I have applied for a job, I have never been asked about that. It may just be someone interested in it. At some point, the employers must know, obviously, but I am not aware whether that is something they are not legally allowed to ask or whether just by custom it is something that has not been asked. It is something that could be used against them, if for some reason a person was fired, who then says, "It is because I was a reservist," and they do not want to have any written record of that. At the moment, I am not aware of that being asked as a common question.

Senator Plett: If a reservist is called into active duty in a war or to help deal with a disaster, is he or she obligated to leave immediately. If I were in the reserve, could the forces ask me to drop what I was doing and head out for wherever?

Mr. Weitz: For enduring missions such as Afghanistan and Iraq, the policy is 24 months' notice. However, if there is a war with Iran tomorrow, the reservist will have to go. The expectation is the person will go once every six years. You want to let your employer know two years in advance so that it can be factored in. Ideally, that helps mitigate some of the problems.

Senator Plett: There is a huge difference in the percentage of women in the reserves versus the percentage of women in the regular forces. Do you know why? I believe it is less than 15 per cent in the reserves and 25 per cent in the regular forces.

Mr. Weitz: No, it is not clear to me. Of course, the percentages have been increasing over time. It could be that the U.S. will soon have a Secretary of Defence as a female. That could have another impact as it has had in the foreign service. It is not clear to me why it is fewer. It could be that many of the reserves people have served before, and they historically been men. Since we have an increased number of women serving, there will be a lag, but at some point that will rise as well. There is no clear reason. Women are not discriminated against in the reserves. In fact, many of the skill sets you want are occupations where women are in the majority, so it is not clear to me why.

Senator Plett: Did I understand that the majority of reservists would have been in the regular forces at one point?

Mr. Weitz: I do not know if it is a majority, but many of the reservists have prior military service in the active component. Now the guard and the reserves make an effort to identify and ask people who are leaving the active component whether they would be interested in sustaining their involvement in the military but with a less deep commitment and some reserve options. The people leaving are already trained, so they are valuable people, and the reserves would like to capture those people, if they are interested.

Senator Plett: National Defence plans to reduce the class C reservists from about 1,600 at this point to 223 by 2013. Aside from the fact that not having enough reservists might create problems, will doing that take care of some of the other problems we are hearing about?

Mr. Weitz: My understanding is that class C people have already had that kind of experience. That would have certain costs in terms of the skills. It might take them longer to integrate a non-class C reserve than a class C, so there are some negatives to that. They are assuming there is a reason for that being proposed, perhaps costs or other reasons, so you need to make a trade-off. For the reasons I gave, those people are the kind of people you want to have readily available because they could be brought back quickly into the active component.

The Chair: I believe there is a payment issue.

Senator Day: Mr. Weitz, thank you for being here today and thank you for introducing us to Ms. van den Berg.

Mr. Weitz: She is the one who told me about the class C reserves.

Senator Day: Each of us is interested in the point that Senator Lang and Senator Mitchell brought up in relation to protecting the reservist. Initially, your comment was with respect to the time of hire, but you made it clear that it is also when the reservist requests time for deployment after being hired. Both the private and public sector in the U.S. are under federal legislation.

In Canada, we have taken the approach that public sector legislation would be in place to protect the reservists. Ms. van den Berg might have told you about the Canadian Forces Liaison Council, which constitutes a number of volunteers in the private sector who try to look for the patriotic backbone of companies to sign on to do this voluntarily.

Have you seen that model anywhere else, or is that peculiar to Canada?

Mr. Weitz: Many ministries of defence make an effort to reach out to employers. In the U.S., it is thought to be a trinity between the reservists, the military and the employer because you need to have all three, as well as the family.

Many countries will supplement these efforts to induce compliance and encourage employers to give more than what the law requires, such as providing extra benefits and making up any difference in pay. For example, if you are working for Microsoft and you go off to work in the reserves or the military, you will experience a pay cut. There is a lot of effort to get employers to make up that pay difference, and some do.

Senator Day: On a voluntary basis?

Mr. Weitz: Yes, because people will bring back leadership skills. If I apply for a defence contract, I will have a better understanding of what might help, and so on.

It is unusual that there is not some kind of legal requirement applied to protect reservist status in a country. That is why I am interested to know how effective this voluntary strategy has been.

Senator Day: We are interested in the comparisons that you can bring forward. You talk about the revolution that is going on. Is the trend towards specialization and domestic activity, or in most NATO countries, for example, are you seeing a holding onto the old concept of having these soldiers almost battle ready and then with a bit of work they are ready to go into their particular specialty?

Mr. Weitz: The U.S. example is best. As far as I understand, there is still a lot of tension. A lot of the senior officers grew up in Vietnam, and the people who joined the reserves are the people who did not want to serve in Vietnam. You would go into that and then get out. There is a lot of weekend warrior type of mentality. It has been breaking down over time, but it still persists.

The U.S. is actually the worst. There is a lot of tension around this whole question because of how divisive Vietnam was and how the National Guard was misused as a way to shield people from service, so there was a lot of manipulation of who got in and what they were doing. That has particularly been since the early 1990s and especially with Afghanistan and Iraq, where you see much more bonding, particularly at the lower level. At the unit level, you cannot tell who is a reservist and who is in active duty. From my understanding, I think that is true in Canada about the units and reserves as well, that there is no clear indication. It will take a while to rise up to the leadership level. There is still a bit of prejudice, but the U.S. case is probably one of the worst because of that tension.

Senator Day: I understand you to say that the trend is towards having the reservists ready to fill in the ranks when needed. Is that correct?

Mr. Weitz: Correct.

Senator Day: The reservists would be ready to fill the ranks as opposed to a specialization role, such as perhaps just a home guard role, national emergencies and internally, that kind of thing. Is that less important in the future?

Mr. Weitz: Right. The problems everyone is running into are declining defence budgets, people, ships, planes et cetera. There is not the luxury of having one group that could take off a percentage of that and only focus on a homeland disaster that may or may not occur. You could see why it makes sense because some people want to do that, and it is something they could concentrate on and develop first-rate skills as a result. Rather than trying to make them a jack-of-all-trades, they can concentrate on something that is vitally important.

However, except for a small number of people who were trained, for example, in weapons of mass destruction and whose focus is on the National Guard to deal with a homeland emergency, they would even be available for a NATO contingency or if something happened in Canada or Mexico. For the most part, you just do not have the luxury of being able to do that; there are not enough people or enough money.

Senator Day: In Canada, referring to the army reserve or the militia, the budget is a global one that goes to that element of the Armed Forces. When the army is deployed or needs extra equipment, the reservists suffer first and they receive less training days and less up-to-date equipment as a result. Is that something you have seen elsewhere? Have you seen that the reservists have their own annual budget that they can operate with and they know will not be touched by their brothers?

Mr. Weitz: In the U.S. example, they have a special fund, but it is part of the whole Department of Defense so it can be cut.

The Marines are a special case and have a lot of influence in Congress; no one will deal with their budget without approval.

With respect to the reserves, no, their budget can be cut and so sometimes you see tension. For example, the air reserves and the Air National Guard need new planes; the F-16s are running out on their life span. We are beginning to bring in the F-35s, formally known as the Joint Strike Fighter, which will be built in Canada and other countries. The question is who gets them. In the past, you would perhaps give them to the actives and then the actives would transfer their newest version of the F-16 to the reserves, but because of cost constraints, the actives are trying to get rid of some of their old planes before their service life because it costs too much to keep them going. The actives are trying to focus on the latest equipment. That development is depriving the reserve component of this transfer process.

To counterbalance that, there is a school of thought that it is not appropriate to give the reservists second-hand equipment because they need to be interchangeable. Again, if you are doing a massive buy — and they found this with some of the major tanks and planes — you are getting a large quantity when you pool the actives and reserves together, so you can get discounts. Then, there is a question of who gets the first group of planes and it is usually the actives because they can make a better case, which could cause problems.

Senator Lang: We keep comparing ourselves to the United States, and sometimes I think that is an unfair comparison.

What is the situation with the reservists in Australia? How does their situation compare to ours considering the situations that our reservists have to deal with? I assume the numbers are somewhat similar.

Mr. Weitz: That is a good comparison. I have not looked at it recently, but they have the same kind of resource base and constitutional principles, being the former British Colonies. They have a different threat profile than Canada. Both countries are blessed with no immediate foreign external threat, but Canada, because it is close to the U.S., if the U.S. gets into a conflict with Islamist terrorists or some other country, Iran or whatever, the blowback can affect Canada very easily. You can see the scenarios; either the terrorists come here or if a missile is launched from North America, Canada gets involved.

In Australia, their big debate is how much longer they want to keep sending their forces to participate in Iraq and Afghanistan for different calculations. That keeps them involved, the Western Alliance. They are part of NATO, but there is a lot of debate that maybe we should become closer with the Asian powers. To counterbalance that, there is now a concern about China.

Australia has a system of reserves that was similar to the tiered readiness structure the British used, which the United States does not use. That is something Canada may want to look at, although it is far away from what Canada is doing. Your active and reserve components are treated much more similarly than in Australia.

The Chair: That raises a point that I wanted to get at. You used the phrase "tiered readiness." Is the ever-present domestic security threat in your country making that unacceptable or is it still part of the debate?

Mr. Weitz: It has become a federal argument. That is only half of it. The other half is that in the kind of conflicts we have been experiencing, only those who are very ready would be used. We found this out during the Persian Gulf War of 1991. We had these enhanced readiness brigades; supposedly the guards would contribute and they would integrate with the active force readily. The army did not trust them because they were a tier lower. They thought they would be massacred and they would be blamed because they were not trained properly, so they kept them out. It was very divisive. They are trying to move away from that and to make them interoperable.

In Afghanistan and Iraq we have seen a large number; I think Canada has 20 per cent, and in the U.S. sometimes 40 per cent have been serving from the reserve component. If you are to use them actively, you have to keep them ready and active.

However, there is the federal argument. Do you want to be the governor of a state that has an unready National Guard unit? They have changed this since Hurricane Katrina, but the old model was a cascading model. In that model if there were a disaster, you would have to rely on the local emergency responders and the National Guard, and the federal groups would only come in if necessary and only later. They found that was dangerous because, as in Katrina, there was cascading failure. During Katrina, the response of initial emergency responders collapsed. More responders were called in and they could not deal with the situation. Unfortunately, by the time the federal responders were called in, it was too late.

You do not want to be the governor of a state that has unready forces. It has become a federal issue.

Senator Dallaire: You have sent to Afghanistan and Iraq formed reserve units, battalions, squadrons and so on within which you have regular personnel, to varying percentages.

Mr. Weitz: Yes.

Senator Dallaire: How is the body that is left home in the armoury for the reserve unit to continue the recruitment and the development of leaders and so on structured to sustain the unit when it is in operations and then comes backs and reintegrates back into society? Is there is a separate structure that holds the garrisons of all these reserve units across the country?

Mr. Weitz: They moved away from that. Like you in the 1970s and 1980s, there were a lot of local armouries and reserves and so on. They eliminated many of those, the BRAC; they have eliminated and consolidated many of them so that you now have active and reserve sharing the component. You have the active still running the base, even the reserve. With armouries, instead of having material stored, you often now expect defence contractors to build whatever the latest version is much more quickly so you do not have a lot of equipment lying around in storage.

In a way, the integration problem is solving this. If you have a base, and some of the units active on deployment and some on reserve, you still have residual active reserve sustaining the administrative function.

The serious problem is if we continue in the direction we are going, which is reducing the number of troops while relying on the more actives. Because they are getting rid of the bases and consolidating them and relying on virtual administration, that has not been much of a problem yet.

Senator Day: To clarify the record, Mr. Weitz, you have been talking about reservists. Should we be including in your comments the National Guard as part of reservists?

Mr. Weitz: Yes, in the U.S. we have seven reserve components. The army National Guard and the air force National Guard are a bit special. They are often paid for by the federal government but their first duty is to deal with state-wide emergencies. They answer to the governor. However, they have always wanted to be potentially available for active duty service so they are considered reserve.

You then have the five components. If you include the Marines and the Coast Guard, you have seven.

Senator Lang: I believe you indicated that the United States is reducing the number of reservists as they are looking at their budgets. Is that what you said?

Mr. Weitz: No, they have been going up recently. My expectation is that with the end of the Afghanistan mission, with the end of the Iraq mission, there is a lot of pressure on the federal budget and the thinking is that they will see some reductions.

Senator Lang: There will be reductions in the service?

Mr. Weitz: It will probably be in everything. The defence budget will go down. It will be held steady. I expect the same thing will happen in Canada. There will be pressure to reduce the budget without these missions. As part of those reductions, you take out some people.

We cannot be sure until this is straightened out, but if you find the reserves a lot cheaper, you would transfer people to the reserves. You could build up reserves as you reduce the active. We should hold the record open until that study is out and see what will happen.

The Chair: We will wait for that. Thank you very much, Dr. Richard Weitz, the author of The Reserve Policies of Nations: A Comparative Analysis. Thank you for your time and your contribution today.

Our second witness today is Colin Busby, Policy Analyst with the C.D. Howe Institute.

We are interested in hearing from Mr. Busby because he wrote a paper published by the institute in January of this year entitled Supporting Employees who Deploy: The Case for Financial Assistance to Employers of Military Reservists. This is an issue we have just been discovering over the course of the last hour.

Mr. Busby was awarded the 2007-08 C.D. Howe Research Fellowship and has been a policy analyst there since. He is a graduate of the University of Alberta, Bachelor of Commerce, and earned his MA in Economics at the University of Ottawa. While working on his MA, he also held a policy analyst position with Industry Canada. He has studied in other places, including Paris, worked for the UN Industrial Development Organization in Vienna and finds himself in the nation's capital today.

Welcome; I understand you have a few opening remarks.

Colin Busby, Policy Analyst, C.D. Howe Institute: Thank you for inviting me to speak here today.

I want to discuss the difficult balance between a reservist civilian and military life. Then I would like to discuss the costs of job protection legislation for reservists and how the federal government can play an important role in the equitable distribution of an employer's displacement costs to better support a reservist's civilian and military life balance.

Part-time reservists have a choice to activate for full-time military service and temporarily move away from civilian life. New entrants to the labour force or students at post-secondary institutions may find opportunities for higher earnings, adventure and a sense of duty by self-identifying for full-time military duty.

In contrast, those who have been working civilian jobs for many years may have strong ties to their community, to their employer, and may receive a higher salary than that offered by further military service.

With approximately one reservist for three regular soldiers today, military planners can save on institutional and overhead costs during peacetime while augmenting the size of the total forces necessary during times of increased operational demands. With roughly 500 of the 2,500 soldiers Canada rotates in Afghanistan being reservists, the availability of reservists is clearly essential to operational success.

The rising demand for reservists led to the proliferation of federal and provincial job protection laws beginning in 2006. These laws set the various eligibility conditions — durations of leave — for an employee to be reinstated in a comparable position of similar wages and benefits upon return.

Employers are not required to pay a reservist's salary while he or she is deployed. Although reservist job protection laws are intended to support a reservist's choice to volunteer for military deployment, these laws shift the costs of military activities on to individual employers, potentially causing hiring discrimination that, in turn, raises doubt about the effectiveness of these laws.

In the case of deployment, employers will likely need to hire someone else to perform the reservist's work or increase the workload of existing employees. Output may fall, productivity may decline and search costs for a new, temporary employee may be substantial. Further to that, retraining costs upon a reservist's return may also be necessary.

Evidence from the United States reveals that among the 6 per cent of all American businesses that hire reservists, the ability to cope with the loss of an employee varies substantially. Small businesses and businesses that require workers with highly specialized skills often suffer significant costs, and in rare cases partially shut down when these employees are lost to reserve duty.

Larger firms, on the other hand, also experience disruptions but are generally more able to absorb lost employee hours with a limited slowdown in production or additional expenses.

The employer's obligation to protect the job of a reservist has parallels with other mandated workplace requirements where the costs of social obligations are transferred on to employers who employ specific groups: For instance, maternity leave job protection, leave for jury duty and the requirement to accommodate the disabled in the workplace.

In the case of maternity leave, the number of employers who hire women of fertility age is relatively diffuse, thus spreading out the costs of this social obligation. In other cases, such as jury duty, a select few employers are required to bear the burden of the costs and activities that society believes are worthwhile.

The question then arises as to whether society at large ought to share at least some of the costs of accommodating special classes of workers, rather than being borne in the main by particular employers.

Shifting reservists' deployment costs onto government would better foster a reservist's relationship with their employer and protect the role of reservists in Canadian society. Potential reforms must consider the impact on the decision to become a reservist; an employer's decision to hire a reservist; and a reservist's decision to volunteer for military deployment.

Other countries, like Australia and the United Kingdom that similarly rely on a large reservist force, have already offered employer compensation programs to complement and minimize the costs from job protection legislation.

Canadian reservists, their employers and the general public would benefit from an administratively simple financial support program that bases benefits, up to a reasonable ceiling, on the reservists' civilian wage and the size of the organization for which they work. The higher their civilian wages, the higher the financial support; the bigger the firm, the smaller the support. Benefits could be offered to public or private employers whose employees go on class B or class C reservist service for more than 30 days and this could be limited to 16 months in duration.

The costs of such a program would likely be small, with simple estimates ranging from $5 million per year in peacetime to around $20 million per year in times of war. Estimates are based on the deployment levels we see in the Afghanistan mission.

While recruitment and deployment decisions may not appear to be an issue today, we should be thinking about the maintenance of a large reserve force, planned to increase to 30,000 members when we are not in a time of war. As long as some employers of reservists struggle to absorb the costs of losing an employee, the employer relationship with reservists — and ultimately the Canadian military — risks breaking down.

Canadian employers and the Canadian Forces need to work together to keep reservists engaged and to develop their potential. Key to this is the reservist's relationship with their employer, which is the relationship upon which the balance between civilian life and military life pivots. The risk is that the current policy framework of stick and no carrot will lead to an erosion in the employer-employee relationship.

A simple and inexpensive financial compensation package for employers should exist in a nation that needs to be fiscally responsible, and by this I mean maintain a relatively small regular force unit and augment it with large reservist units in a time of war, and a nation that values the role reservists play in bringing back the realities of our nation's wars to the communities across Canada.

The Chair: Mr. Busby, you seem to be making two large points. You are proposing a larger reserve force as a Canadian reality, and also the subsidizing of employers. I am sure there will many questions on whether there is a simple compensation plan.

Senator Dallaire: We are in an era where we are not going to war in the classic sense of mobilizing massive units and tens of thousands of troops facing other classic military. We are not doing peacekeeping in the classic sense of Chapter 6. We are involved in everything from Haiti to Afghanistan and everything in between. We are in an era of conflict that calls for task organizing and flexibility in our forces.

To achieve that, one of the options has been to augment the regular force with reservists and give them a lot of training before we deploy them because they are not at the right level. However, there are two questions on your concept. First, is industry to be held accountable for the injured reservist upon return?

Second, deploying the reservist for 16 months is a package deal. However, in order to obtain the leadership training and technical skills, the reservist has to spend some months away to acquire the skills, knowledge and experience he or she needs for moving in the ranks in order to continue the units.

Do you think that a process can be arranged with industry to allow the reservists to attend training as well as fulfill his or her deployment?

Mr. Busby: I have not thought much about finding a way for employers to be accountable for accommodating injuries or disabilities that reservists may have when they return to work. The current legislation requires employers to provide a returning reservist with a job similar to the one he or she left. It does not refer specifically to disabilities, and I am not certain that industry would be willing or happy to move in that direction.

There is difference of opinion in the industry experience, and my presentation today has to be taken in that light. Many employers will be happy to accommodate injuries and others may not be financially able to do so. I hope that answers your question to some extent.

Concerning your second question, I had proposed finding a way to support employers with the burden of displacement. I proposed making it allowable for reservists on class B or class C service. You spoke of two to three weeks of full-time training. I consider greater than one month to be a very long period of time with much more substantial displacement costs. That seems to me a reasonable cut-off point for a program dealing with reservist leave. If they are going away longer than that, I believe that we could work out an arrangement to accommodate.

Senator Dallaire: We have a federal law that guarantees that reservists can return to their jobs. However, the federal government has been notoriously bad, even the Department of National Defence, about allowing people to deploy. One of the main reasons for that is that there is no backfill for them. The department does not get any extra PYs or funding to train people to do the reservists' jobs or to fill the jobs. The positions often remain unstaffed.

You are saying that the time has come for a decision on compensation to industry and government, including protection and promotion. In the alternative, has it not come yet after five years in Afghanistan where many reservists have been deployed and where we have suffered many casualties?

Mr. Busby: I believe that the time is right to move forward with such a plan. The objective of the legislation was to support a reservist's decision to deploy. This would be the government's way of easing the burden of the reservist. At the same time, it was simply to transfer a portion of the cost of deploying a reservist, which costs are now being borne by individual employers.

Large firms, as you mentioned, are generally better able to absorb these costs, whereas for a company with five or fewer people, losing a reservist with a specific skill set can be a significant detriment to the functioning of that organization. The necessity to hire and train a replacement with similar skills in a short period of time can have a substantial impact on small businesses and can put them at a competitive disadvantage.

While the experiences are different, I believe it would make sense for the government to introduce, as a carrot complementary to the stick already in place, a reasonably simple employer compensation package that is allowed to fluctuate with firm size such that smaller firms would receive greater benefits.

Senator Dallaire: After five years of combat and significant employment of reservists, is it not essential, to maintain operational effectiveness with the use of reservists that a compensation instrument be brought in to sustain this effort.

Mr. Busby: Yes, and with appropriate foresight it would have been brought in at the same time that protection legislation was brought in.

The Chair: Have you costed this? Do you recommend funding it through the Defence Department, which would require cuts in other areas?

Mr. Busby: There was a recommendation that the Defence Department fund it. That recommendation was for the specific reason that their current labour decisions, where they are essentially not bearing this cost that the employer bears from calling up a reservist, is that there be a specific reason for the Department of Defence to bear that, so that essentially their human resource decisions are made with much fuller information.

The Chair: It would have to be financed out of existing funds.

Mr. Busby: Exactly, yes.

Senator Plett: I asked a previous witness a question on voluntary service for reservists. Perhaps I misunderstood his answer, but I understood him to say that there is nothing voluntary about it, that when reservists are called up they have to go. You are telling us that reservists have a choice, except in the case of a state of emergency.

Mr. Busby: That is correct. In Canada, that is the case. In the United States, that is not necessarily the case. It adds a new dimension to this whole problem.

Senator Plett: I support much of what you are doing. It is not often that I support additional taxes, but in the case of our good men and women going overseas and defending our country, I certainly do.

You report that some companies will not hire reservists because of the difficulties they foresee. Yet, I am also led to believe that they are not allowed to discriminate on that basis. How big of a problem is there with companies not hiring reservists. If I were in private business, I may try to find a loophole, but I would not have that choice. I must hire if the person is capable of doing the job.

Mr. Busby: That is a fair point. We have no specific data on the number of broken employer-employee relationships because of the legislation. The fact is that the cost of hiring a reservist is higher than the cost of hiring a non-reservist because the employer bears the risk that the employee might deploy. It is true that reservists do bring a unique set of skills to the private labour force, and that can help offset some of the costs. The reservist also brings a unique set of skills to the military from his or her private sector work. On the whole, businesses that hire reservists, as opposed to non-reservists, are assuming the accompanying risk; and that is the way it will be. As a consequence, will some employers choose to avoid that risk? In my opinion, it is quite possible. Will some employers be willing and happy to take on the risk? Yes. The objective of this policy is to reach out to those businesses that are not capable of doing it. Some cannot do it as a matter of smart business sense because their profit margins are too thin.

Senator Plett: It would be illegal for them to do that. Is that correct? As an employer, I am not allowed to discriminate against women, for example. If a woman is equally capable of doing the work of a man, I cannot hire a woman rather than the man or vice versa. I need to hire based on qualifications. Would that not be the same in this case?

Mr. Busby: That is correct, as I understand it. There should be provisions in the law that do not allow that type of discrimination. At the end of the day, does such a law prevent it from happening? When you hire an employee, you understand that one comes with risks and costs and one does not have that.

Senator Plett: I would not be allowed to pay a reservist less money than I would pay a non-reservist if they are capable of doing the same job.

Mr. Busby: That is also correct. In the circumstance where you have the risk and financial obligation, legislation will be for these employers. At the end of the day, the response could be lower wages or a way of sharing the risk, of spreading out the risk. Businesses have many ways of doing this. Certainly, the United States has legislation regarding people with disabilities. We have been able to look at that data in terms of providing workforce requirements for them. In some cases, it actually hindered their employment, as opposed to supporting it. These types of stick measures can have unintended consequences that work against the original intentions of the legislation.

Senator Lang: I noticed that in a previous forum where you testified, you indicated a cost prorated from 2006 to 2011. In 2008, you estimated it would cost $21 million; in 2009, it would cost $19 million; in 2010, it would cost $26 million. I assume that if we are not in Afghanistan, the cost would be down to $8 million. I assume that is why the number dropped. Can you tell me where you got your projected numbers and whether they were verified? How many reservists have you estimated would be involved?

Mr. Busby: It is a simple calculation. I performed the calculations with data on reservist deployment from the Department of National Defence, specifically with regard to the duration of their deployments. I took into account how long they had been on leave. I simply used the median salary in the economy as the base point to calculate these figures. I also took into account the fact that 50 per cent of the people in the deployment data I had for reservists are likely to be students. This assumption was supported by the Department of National Defence. On the basis of what I was left with, assuming the distribution in terms of the size of businesses and the length of deployment, I made these simple back-of-the-envelope numbers. In my opinion, they are a very good gauge, and certainly in the ballpark, of where the costs of this program will end up.

Senator Lang: Our country, not unlike many other countries, is facing and must deal with a severe deficit. At the same time, we are looking at millions and millions of dollars to be added to a budget. It is easy to say that we will look at another $20 million and easy for us around the table to agree to that if we do not have to hike the taxes or cut somewhere else.

I do not think anyone would argue with the principle that there should be some compensation to the employers for the reservists who are called upon to serve. I do not think you could argue against that principle. Are you taking a position with your knowledge of the military that, in view of the fact that we are stepping back from the theatre in Afghanistan and the costs will be less in 2011, that the reserve will stay the same in numbers as the active military force? Someone will have to deal with this overall situation financially.

Mr. Busby: Those are all fair points. With regard to the financial perspective, I agree with you in the sense that I am not a big fan of the government taking on more responsibilities in a time of significant deficit. The proposal I put forward has been tailored in such a way that it is essentially a low-cost solution. It is meant to be administratively easy. There is a strict ceiling on the amount of money that would be transferred.

Senator Lang: It would be 16 months.

Mr. Busby: Yes, 16 months would be the duration. In terms of compensation as a percentage of a reservist's salary, I am talking about a sliding scale. A reservist's salary is a proxy for the type of productivity they add to a company. As a relative ballpark figure, it will let you know what they mean to that organization. Let us compensate small businesses and businesses with fewer than five employees 80 per cent of a civilian reservist's salary up to $47,000, which are the yearly maximum pensionable earnings that we use for the Canada Pension Plan this year. That is a limit we are familiar with in the area of social security.

I propose that the compensation to large employers of 100 or more employees be reduced to 40 per cent of a reservist's salary. The idea is to make it fiscally responsible. I did not necessarily make a comment earlier about my expectations or my perspective on the size of a reservist heading forward. I was stating that the Canada First Defence Strategy says that we will have 30,000 reservists in 2020 and 70,000 regular forces. That is the way it will be. A fiscally responsible government will look as well at medium-term deficit reduction strategies and consider the fact that should operational needs arise during those periods, having a large reservist force to call upon that is much easier and more fiscally generous to maintain in times of peace, is fiscally responsible and smart.

Senator Mitchell: You state in your program that the compensation would be based on the salary of the reservist. You suggested 80 per cent up to some limit defined by that formula. You are saying that you absolutely believe that an individual business should not be asked to support a much broader social good, that they should be compensated and that they should be compensated properly. I do not see how the link is sustained between the reservist's salary and the compensation because the company would not be paying that salary to the reservist in any event. The company would have that money remaining. It seems that you want to compensate them for hiring costs, inconvenience and training costs for someone new to fill the position in the interim and for a returning reservist who might need them. Did you consider those parameters because it seems to me that might be cheaper and fair at the same time?

Mr. Busby: That is a fair point. The United Kingdom took on a similar program. As part of that program, the employer was required to fill out lengthy administrative documents upon a reservist's leave. They detailed and documented exactly why and how much it cost them to either rehire someone or not rehire someone, in some cases. The U.K. experience is that it is administratively expensive, cumbersome and takes up a lot of the employers' time. At the end of the process, you can start to defeat the purpose of what you were trying to do with that type of more detailed procedure. In addition, it is hard to calculate exactly how much it will cost employers when a reservist leaves. The employer can document how much it costs to advertise a job and to hire a temporary worker for two weeks. They employer can provide that information, but that does not necessarily take into account the amount of time other employees had to work taking on the reservists files or work responsibilities and the amount of time that employers spent in hiring the other individual. Many other things make it a difficult process. What you might gain in terms of lower fiscal costs by going in that direction you will probably pick up in terms of higher administrative costs. For me, there is an offset there, and I do not see any advantage.

Senator Mitchell: You had to pick a way to keep it simple.

Mr. Busby: Yes, exactly.

Senator Mitchell: You mentioned that the upper limit of $20 million would be placed on $30,000. You took that off the page of whatever projection is being made, and rightly so. You would have had to apply some kind of assumption about how much deployment and where and for what reasons and for how long. What assumptions did you make about the deployment?

Mr. Busby: The deployment figures I used in my calculations for the years 2006 through to 2011 were the exact figures we had from the Department of National Defence.

Senator Mitchell: Those figures assume that we are at war somewhere.

Mr. Busby: It assumes that we are at one of the highest levels of deployment in recent Canadian history.

Senator Mitchell: The $20 million might be a maximum, and we could consider something less, or the reality would be something less.

From what I know of the C.D. Howe Institute, you do not like increased taxes. Is that right? Is that your policy? You cannot speak to this?

Mr. Busby: Madam Chair.

The Chair: You are not responsible for them.

Mr. Busby: The C.D. Howe Institute believes in fiscal responsibility.

Senator Mitchell: Did I hear you say this would not engender increased taxes? Did you say that somehow we would do this within the budget that we have without increasing taxes.

Senator Day: It is less equipment, was it not?

The Chair: He said it was to come out of DND.

Senator Mitchell: It would mean less money for health care or for something would it not.

Mr. Busby: In the realm of federal public sector spending, I am talking about $5 million to $20 million. Many could consider that a drop in the bucket, but you could also say that the $5 million to $20 million could be needed to be raised by taxes. All else being equal, assuming we will always be in a balanced budget, if we need to raise taxes, fine. Is it a good thing to do in this case? Yes.

Senator Mitchell: Excellent. We understand.

Do you have some insight into the federal record on granting long-term leave for reservists, or is that something you have been looking at?

Mr. Busby: No.

Senator Day: This will be helpful to clarify the record, Mr. Busby. Is it your understanding that, in the last five or six years, each of the provinces and territories and the federal government have passed legislation to protect reservists who are employed in the private sector as well as the public sector?

Mr. Busby: That is correct.

Senator Day: We do not have a copy of the legislation. Is it a model legislation that is the same in each of the provinces?

Mr. Busby: No, the dispersion is quite large.

Senator Day: That makes it a little difficult.

Mr. Busby: Eligibility notice, for example, to take one element of the legislation, ranges from as soon as practical, in most jurisdictions, like Ontario and New Brunswick, to 12 weeks in Nova Scotia. We are just talking in terms of the amount of advance eligibility notice they need to give their employer.

Senator Day: That is the time before they leave, yes.

Mr. Busby: We are already talking about a difference. I agree with you that is a problem. My suggestion is let us set the eligibility requirements for the program that I am proposing at the lowest level possible in each jurisdiction. Whatever the eligibility requirements that are the weakest in any jurisdiction, we set it at that level. As a consequence, we would get two outcomes. One is where an employee-reservist qualifies for job protection legislation and his or her employer is reimbursed. The other is where an employee would not qualify for job protection legislation, but if their employer were to choose to want to receive these funds, they could do so, and, at the same time, guarantee that the reservist's job would be kept intact. It is a way of getting around, in some ways, the legislation's requirements.

Senator Day: The funds for this would not all come from the federal government but could come from the province. If it is provincial legislation that is protecting the employee's position, then presumably the compensation would have to come from the provincial purse, in that case.

Mr. Busby: I tend to prefer the administrative simplicity of one jurisdiction handling the responsibilities. One thing that could be done as a consequence of the policy is a suggestion that every province get on some sort of harmonized legislation standards in terms of their eligibility requirements. That would be a big step forward.

At the same time, this policy is intended to cover a few specific people in private sector. Many public sector employers already bear the costs of a reservist going on leave. Many police forces in the country have HR policies where they even top up the incomes of reservists when they go on leave. That is born at the expense of the taxpayer. We are talking about the federal government stepping in, since National Defence is a public service for the country, and reassigning the costs a little and balancing things out. At the same time, the additional expenses to the taxpayer are small, because police forces and fire departments are the main employers of reservists, and they are already taking on these responsibilities.

Senator Day: That is an interesting point. We have a bit of a jurisdictional problem because the legislation upon which the reservist-employee would make his or her claim is provincial; yet you are suggesting that the payments should be from the federal purse. Something would have to be worked out in that regard.

Is there anything in any of the provincial or federal legislation that requires that there must be a declaration of an emergency before the reservist can go off on deployment and trigger this job protection?

Mr. Busby: When the state of national emergency is invoked, reservist call-up no longer becomes a voluntary choice.

Senator Day: I understand.

Mr. Busby: I am not sure how the job protection legislation would apply in terms of national emergency.

Senator Day: Is job protection legislation there even though the choice is entirely the reservist's to say, "I will deploy. I would like to go away for a year?" Obviously the federal government or the Armed Forces would need that person, but it does not have to be an emergency. There are no operative triggering words in any of the legislation, to your knowledge?

Mr. Busby: No.

The Chair: Thank you for those comments. I think you have pointed out some interesting differences between "public" and "private

Senator Dallaire: We have to remember that a 16-month deployment is one problem, but the reservists often go away for three weeks or two months, and it is more complex and more demanding on the industry to be able to compensate. Your compensation must also factor in that the individual can be lost at a critical time, but only for a short time. There is a whole process of training and sustaining people to replace the reservist and then letting the reservist go to do the training.

Do you have any hard data on reservists' complaints? Do you have any information on reservists who have been prevented from deploying or training because their employer has pressured them not to do so? It could be coercion such as, "You cannot let us down." On that point, is there any hard data?

Mr. Busby: No, there is very little.

Senator Dallaire: The Canadian Forces have not provided you with that data either?

Mr. Busby: No, and I am not sure if they have it.

Senator Dallaire: If we are not going into operations, if we pull out of Afghanistan, then you could use a bigger reserve and less of a regular, and that could be more cost effective.

If your forces were of a big enough strength to be able to sustain any initial deployments without needing a year and a half of training to deploy, then I would agree with you there. However, with the size of our forces when the mission comes up, the troops that are deployed have to be ready and operationally capable. On the second or third deployment rotation, you can bring in your reserves.

I say that because with the attrition rates and the availability, because they are free to go or not, contrary to the policy in the United States, you need anywhere between six to 10 reservists to fill one slot. If we have 500 deployed, you need at least 3,000 behind them to chose among to get 500. That number is multiplied when you are sustaining operations, when they have to go a second or a third time. Do you have any solution to that?

Senator Day: Do you agree with that? Should we not establish that first?

Senator Dallaire: That is fact.

Mr. Busby: The question is layered; there are many elements to it.

The challenge is really about maintaining this relationship with private employers. It comes down to maintaining a balance. Let us face it: reservists are the employees for both the military and private employers. They are sharing an employee. We need to find ways to strike that balance.

With regard to your point about reservist forces and the need of one out of every six or seven, thinking strategically, you are not just thinking about combat arms. Yes, reservists tend to be more disproportionately involved in combat arms than regular forces, but the niche value of reservist forces is that they may have private sector skills that are unique; you cannot find them anywhere else in the regular forces. This is their advantage. It could be a medical or technical skill, for example. There you might only be looking for one and one. Who knows what the future holds, or what the future engineering demands might be in the case of a national emergency? At that point, you might be looking for a few specific individual reservists who can make a world of difference in terms of those hiring decisions. I tend to look a bit beyond that traditional combat arms sense that I think you are implying about. I hope that adds a little reflection to the question.

The Chair: We will move on here.

Senator Dallaire: I was not implying that.

Senator Plett: Further to what Senator Day was saying about jurisdictional issues, I understand that we are helping the employer not the employee. It would not be an employee making a claim. The jurisdictional issues would not be that relevant, would they? An employer could not make the claim to the federal government. Is the subsidy going to the employer or the employee?

Mr. Busby: It goes to the employer.

Senator Day: To clarify it so you can answer it for him, it is a question of discrimination. If the employee felt he or she was being discriminated against, saying "You cannot go," where will that person go to get his or her claim heard?

Senator Plett: I understood it was about the subsidy or the money issue that you were referring to.

You are talking about 80 per cent for companies that have five employees or less, is it?

Mr. Busby: That is correct.

Senator Plett: One of the problems I have with that is that if I am an engineering firm and one of my engineers goes versus one of my draftsmen, clearly, the job of training would be significantly less with one versus the other, yet you have a maximum of $47,000 no matter what level the person is in. I would struggle with that, because it would be a great deal more inconvenient for me to lose a qualified engineer versus a draftsman.

Mr. Busby: That is a fair point and a good point.

One of the reasons why I tried to incorporate that element of a reservist's proxy for their skill set is by basing it on his or her salary. It is likely more probable that the draftsman will be paid less than the engineer. Hopefully, that will capture an element that offsets the fact that maybe the reservist is working for a large organization. The intent of that is to try to capture that. Your point goes back to the fact that, yes, there are differences for each individual employer. The experience changes. Some can absorb it well; some cannot. The idea of this policy is to get the employers on the margins.

The Chair: Thank you very much, Mr. Busby. You presented the committee with some interesting ideas and questions.

Senators, our third witness is Commodore (Retired) Bob Blakely. From 2004 until earlier this year, Mr. Blakely was Commander of Canada's Naval Reserve. Commodore Blakely was born and raised in Edmonton. He joined the Canadian Forces Reserve in 1969 as a member of the Edmonton's naval reserve division and rose through the ranks to become commanding officer in 1993. He has commanded various ships of Her Majesty's Canadian Navy at sea and ashore.

In his civilian life, Mr. Blakely was a journeyman plumber and a pipe fitter before earning a law degree from the University of Alberta and becoming a certified human resources professional. He is a lawyer, a partner in his own law firm, as well as a director of Canadian affairs for the building and construction trades department of the AFL-CIO, the American Federation of Labour-Congress of Industrial Organizations.

Mr. Blakely has a varied and interesting background. We welcome him today. Our testimony is focused on the Canadian reserves and, with his direct experience; we are pleased to have him here today.

Commodore (Retired) Bob Blakely, Former Commander Naval Reserve, as an individual: In the presentation I will make today, the thoughts are my own based on 40 years experience as a classic reservist. I was virtually always a part-time reservist, with some periods of full-time service while I was doing my classification training, and when I became command-qualified taking time away to go and drive a small ship.

I was privileged to serve in the naval reserve. The naval reserve is unique to some degree in that it has a series of missions that are unique to it. It is concentrated on the home game, basically the defence of Canada, and the skills that are required for the naval reserve generally are not resident in the regular force.

We man the maritime coastal defence vessels in a variety of tasks, which includes training the regular naval officers. Our port security and navel control and guidance of allied shipping subspecialty has produced things like providing trained people who will get on the water for APEC, for Los Lobo, for the G20 and, most recently, putting 580 sailors at sea for the Olympics. It has allowed us to support Task Force Afghanistan and support the fleet. The naval reserve is an interesting entity; having said that, it is certainly not a perfect world.

We have a large number of full-time reservists who are serving full-time because there are not enough people to do what it is we are about. When we planned the concept of employment for the maritime coastal defence vessels, we intended to have six reservists who would produce one person on the plate of the ship. It turns out that was a bad number.

We have roughly 400 full-time people in the ships; we have another 400 people full time on any given day, which means of 4,000 people we have roughly 20 per cent who are working full time. Senators, some day in July, on any given year, 70 per cent of the naval reserve, including summer training, is working full time. I spent 75 per cent of my budget between the months of May, June, July and August.

The naval reserve benefited very much from the support of a varied number of maritime commanders who saw the naval reserve as an investment for their organization. They preserved us from the worst of the budget cuts in the past and continue to do so in the present.

In looking at all these things, we are and remain a total force operation. We do things the regular force does not do, for example, mine countermeasures. The theory is we will clear the way so that the big ships can get to sea or get into a port. In fact, if there is a problem with mines on the East Coast, the Canadian Naval Reserve will clear the mines from St. John's, Newfoundland and Labrador right to Key West, Florida.

Where are we going? We have had some opportunities to look at the future. We have talked a lot about the Arctic offshore patrol vessel, what it will be and what it will do; what skills will need to be resident there, what body of knowledge we will need to acquire, and how we will be able to do all of those things. That will be part of the concept of employment of those ships.

One of things we will have to look at very closely is our risk tolerance. With our MCDVs — wonderful ships — we generally get people on long-term class B or class C contracts who go into the ship for two or three years. It certainly is, from the sea training point of view, a wonderful thing. They know who the captain is, they know who the navigator is and they know who the various people are in different places on the ship. However, we need to be able to move more class A and class B reservists through those ships on a regular basis in order to regenerate our ranks. We set a training burden for ourselves that is onerous and, no matter how much we say we will make the training fit the reservist, we make the reservist fit the training.

Where are we going? The answer is pretty clear — at least the navy thinks it is pretty clear — where the air force thinks it is pretty clear as well with their mixed units, where reservists basically serve in a regular force unit. For the army, I do not know if it is always that clear.

Where are our difficulties? Our difficulties are with our HR policies. Our HR policies are ad hoc, disjointed and generally we find out there are problems by grievance, when someone applies the policy to a reservist and finds out it really does not work.

We have difficulty with the classes of service, class A, B and C. An A class reservist normally serves under 14 days continuous service; class B from 14 days to six months; class C, if you are in an operational ship. If one of the MCDVs went down, striking a rock off Victoria today, there would be four sets of benefits for the people who did not make it. For the two regular force engineers there would be one; for the class C there would be another; for the class B there would be another; and for the class A there would be another.

We are an organization that has not done a good job supporting the reservist at his or her civilian workplace to allow the reservist to get training and maintain currency, and the value they bring back to that workplace. There is federal legislation and in each province and territory that allows a reservist the opportunity to serve. Unfortunately, that is a hodgepodge of entitlements. If you are a member of the Régiment de Hull here in Ottawa, it depends what side of the Ottawa River you live on what set of benefits you are entitled to.

We have not done a good job supporting employers and there is an enormous opportunity for us to do that — to let employers know the value they get from members of the Canadian Forces who will serve as reservists.

A number of people think it is a great idea to pay the employer. I am probably not as much there as others. For every employer who employs a reservist, whether he is an A, B or C reservist for whatever length of time, let him get a tax credit. If the person takes two weeks off he gets a tax credit; if he takes two months off he gets a tax credit. If he does not take any time off at all, he still gets a tax credit just for employing a reservist.

Structurally, our organizations will have to find better ways to do business. The chap from the United States who talked about how they had done away with units and gone to centres, there might be a movement towards that in Canada. Traditionally, we have had naval reserve units, ships in major cities, and we have had combat arms and combat service support units in cities. What we have done with them is treated them as units, except we never employ them as units. Maybe it is time for us to look at a different way of doing business.

In 1923, when Admiral Walter Hose, then the Chief of Naval Staff, laid off a portion of the regular force and laid up the ships but two to create the naval reserve divisions across the country, he was trying to take the navy to Canadians. We are now in a position that perhaps, given that it is two hours for every reservist from Manitoba, Saskatchewan, Alberta and British Columbia to get to Victoria to go and do training. Maybe we have to find a different way to do our business. We do not do a very good job of integrating civilian skills into our military framework. The only exception is the medical reserve, which does a first-class job of it.

Generally, we do not know how many reservists we have on any given day, which means that we have a problem with our HR system, and we do not know how many we really need.

It costs money to run a reserve. Depending on the formation and the command, reserves may have a dedicated budget. I had a dedicated budget of $82 million for which I produced roughly 500 full-time people all the time. My colleagues in what was then styled the militia, now the army reserve, had a budget of $1.2 million to keep roughly the same number of people in the field. That is comparing apples to pears, but we have not yet come to terms with the fact that it costs money to employ reservists. The temptation is always there to use the reserve budget for something else.

As I indicated, I spent 70 per cent of my budget through the summer. The young people we keep are mainly students. We keep them for four or five years while they are going to university or college or doing whatever. They count on their reserve income for their rent and groceries. If we dramatically reduce the number of training days they get, they will move on because they are not usually keen to sleep in the snow in the winter and they want to have regular meals.

Finally, we need to find a way to tell Canadians about the worth of reservists, the people who are prepared to give up their free time and holidays to fight forest fires and floods and to go to the Olympics and bob around in a boat for three months.

The Chair: Thanks very much, Commodore Blakely.

On a small point, I do not know what airline you fly on, but you cannot get from Saskatchewan to Victoria in two hours. It might even take you two days at this time.

Commodore Blakely: Well, you can get to Vancouver.

The Chair: When you said in your opening remarks on several different points "we have not done a good job," which "we" are you talking about?

Commodore Blakely: I suppose I cannot say "we" anymore because I am retired, but I mean the Canadian Forces writ large.

The Chair: Is there a reserves management that you are also focusing on?

Commodore Blakely: No. There is the Chief Reserves and Cadets council, which is a relatively informal body, but there is no reserve management system other than to say the naval reserve does have one in its headquarters in Quebec City and the air reserve has one. For the rest there is no management system.

The Chair: The big issue you posed today is that we do not know how many reservists we need. We will see if we can answer that in the course of our discussion.

Senator Dallaire: The 1987 white paper specifically looked at providing the three reserves, as well as the communications reserves at the time, with operational tasks, so we bought the 12 MCDVs.

Commodore Blakely: Yes, senator.

Senator Dallaire: That was to give a focus on training and development of reservists to an operational task. Over the years, did that operational task limit the reservists to that employ, or have they been given opportunities to serve on other ships and get training beyond the MCDVs?

Commodore Blakely: In the main, it has limited them to the MCDVs. Some individuals have gone on to do many things. The regular force has taken a significant number of lieutenant commanders and commanders who were post-MCDV COs into the regular force. It is great for them. It left a bit of a hole in the reserve organization, but it was good for the country all around.

Senator Dallaire: On the MCDVs there are also some regular force people on class B?

Commodore Blakely: There are two on each ship, and they are electricians. The theory at the time was that the electrical portion was too difficult, so they had two regular force electricians, although we certainly have many dozens of journeymen electricians in the naval reserve.

Senator Dallaire: I gather that you now have only six ships that are functional.

Commodore Blakely: I believe that at the moment we are manning eight ships.

Senator Dallaire: Not all of them have the 40 millimetre World War II Bofors on them, do they?

Commodore Blakely: They all have the gun.

Senator Dallaire: I am glad they are armed; naval gunfire is so important.

Do the reservists who are employed on those ships have to take a lot of time away from their civilian lives to be trained to do various engineering and communications jobs, or is the training such that they do not need to be on class B for a length of time to be employable on those ships?

Commodore Blakely: If they do not take some class B time, they will never be employable on the ships.

Senator Dallaire: You have 26 units.

Commodore Blakely: We have 24, a headquarters and a fleet school.

Senator Dallaire: They are spread across the country.

Commodore Blakely: Yes.

Senator Dallaire: They put a naval footprint across the country, which I suspect assists in recruitment, not only for the reserves but also for the regular force?

Commodore Blakely: Very much so, senator. For all of the virtue that I can see in following the United States naval reserve example and having reserves centres to which people can go, losing the footprint across the country would be a significant loss for the navy. People in Edmonton and Winnipeg and Saskatoon know there is a navy in Canada because they went past HMCS Unicorn in Saskatchewan and saw some sailors doing something that looked interesting and they asked about it.

Senator Dallaire: Is your funding level, both O&M and salary, meeting your operational requirements for eight ships, or should it be increased to 12? Ultimately, where did it fit into the operational plan of the navy to dedicate you to the MCDV?

Commodore Blakely: The MCDV was to be a countermeasures vessel. It was to do coastal surveillance and patrol and provide support to other government departments, which we do pretty much daily. We provide support to Customs and Fisheries. The problems with the MCDV is that it is probably 400 tonnes too light and 40 feet too short to be able to really stand out on the Grand Banks or in Hecate Strait and do Fisheries work.

A frigate with 250 people on board burns as much fuel in an hour as an MCDV burns in a day with 40 people on board. One is certainly more cost-effective to do things like Fisheries patrols and to provide routine assistance to departments like the Coast Guard, Fisheries and Customs.

Senator Day: With regard to a dedicated budget, in the past we were led to believe that the navy was unique, and favourably so, in that once the budget is established for the year for the navy, it was managed by you as opposed to the overall navy. If the overall navy needed some extra money to run their frigates, they could not dip into the reserve budget; is that correct?

Commodore Blakely: Yes, we have a dedicated budget and real allocations of funds. In some, I sent money back and in others, I was the grateful recipient.

Senator Day: Do you refer to the end of the year?

Commodore Blakely: We do three cyclical reviews in the course of the year.

Senator Day: Within a single armed force, how was the navy able to arrange doing that when the air force and the army were unable to, which presents a lot of problems for the reserve?

Commodore Blakely: The maritime commander of the day decided that the navy would consist of three formations — MARLANT on the East Coast, MARPAC on the West Coast and the naval reserve — commanded by an officer responsible for what is happening. That gave the naval reserve the necessary impetus to do that. We have done it successfully for nearly 20 years.

Senator Day: Where is the fleet school located?

Commodore Blakely: The Canadian Forces Fleet School Québec is located at Pointe-à-Carcy. It could not be in a more beautiful location. You can sit and watch the world's commerce go by from the fleet school commander's window.

Senator Day: In a previous manifestation, I think our committee visited that area. We also visited with some of your reserve class B personnel. They indicated that they were out all the time, to which you alluded. They were being deployed and required to work much harder than the regular force people.

Commodore Blakely: Most of the sea days that a maritime command logs are logged by the MCDVs.

Senator Day: That was a concern for them at that time. It is nice to have some sea days but they felt they were being somewhat taken advantage of. Is that because you do not have enough personnel or some other reason?

Commodore Blakely: In part, it was not enough personnel. We set our training standards very high, and many people who might have otherwise come, could not get there. For a goodly portion of the time during Operation APOLLO, the regular navy was doing what it should have been doing in the Arabian Sea.

Senator Lang: In your opening remarks, you stated you needed to "regenerate our ranks." Perhaps you could expand on that statement. Following on Senator Day's preamble, we talked about having enough personnel. What are the numbers of volunteers? Are you able to fill the necessary positions with volunteers?

Commodore Blakely: The short answer is, yes. The naval reserve strength is around 4,000. When I left, we were at strength. We have seen some dips. We have been able to recruit people who want to join, in particular as Afghanistan has started to draw down. There is not a spot for them in the army so we tell them to come with us. They do not have to go camping; and we have showers and hot food.

Senator Lang: Toward the end of your opening remarks, you said that you do not know how many reservists you need. Perhaps you could expand on that as well.

Commodore Blakely: The naval reserve has an establishment with positions, just like the regular force. The theory is that everyone in the naval reserve has an establishment position.

The air reserve does not have such an establishment, per se. The land reserve does not have one at all. Units recruit to certain sizes, and they determine the number of people they have on strength by a proxy figure that takes the average number of people paid in a month.

We need to say that we need X number of reservists to do these tasks and to work toward getting to that number, rather than guessing and saying that the numbers look close enough.

Senator Lang: Am I to understand that one day, someone woke up and said that we need 4,000 reservists and that we would work toward that number to satisfy everything we need?

Commodore Blakely: The number is closer to 30,000 but, yes.

Senator Dallaire: For the naval reserve, you were allocated 4,000 positions.

Commodore Blakely: Yes, 4,000 positions, and the establishment contains 5,000 and we are funded for 4,000. The admirals have said that if we can find more people and a way to do it without more money, then we can do it; but there are not establishments for some of the other reserve organizations.

Senator Manning: Commodore Blakely, I congratulate you on your honorary doctor of laws degree from Memorial University in my home province of Newfoundland and Labrador.

I am intrigued by your comments with regard to the different classes and benefits for reservists and how we compensate for time served. You commented on tax benefits for employers. We heard testimony today of a dollar value that should be paid to the employers. You talked about a hodgepodge of benefits.

In your time, has any effort been put into trying to level the playing field or to come up with a kind of across-the-board benefit package or is it simply a hodgepodge of benefits? Has anyone tried to address the concerns that you raised?

Commodore Blakely: A couple of attempts have been made through the Chief of Military Personnel's shop and a couple of others to try to find a way to do that. In my view, the problem has been that getting the HR policy on a benefit package for the various classes of reservists seems to pale by comparison with work on vitally important elements for people or a task force deployed to Afghanistan.

Senator Manning: More or less it is on people's minds but not on the table because there are other more important considerations.

Commodore Blakely: With the number of tasks to be done at National Defence Headquarters, there are many more jobs than people to do them.

Senator Manning: You talked about supporting reservists in the workplace. Exactly what are you talking about?

Commodore Blakely: The federal and provincial legislation has a number of different benefit entitlements, different triggers and obligations on the employer. If the Forum of Labour Market Ministers, FLMM, could get together under this legislation and determine that every reservist in the country would receive this benefit entitlement, certainly we would be better off.

Senator Manning: There were discussions earlier on training reservists. Your biography indicates that you led a team that developed a distance-learning command and staff program, which you used for senior Canadian and allied officers. Is that program applicable to the reserves.

Commodore Blakely: Yes. The program was designed originally for the reservists. The program with a small amendment that is offered to regular force members who will not spend the 10 months at the staff college and to Canadian and allied reserve officers. The staff college program is essentially delivered to people either by distance learning or by attendance at the trade school.

Senator Manning: Could they do a portion of that from their place of work anywhere in Canada?

Commodore Blakely: Yes.

Senator Manning: If they need some training at the staff college, it would follow up.

Commodore Blakely: Yes. There are normally two sessions at the staff college, one in the fall and one in the summer.

Senator Manning: Does the salary of reservists differ? One of the earlier witnesses today suggested a blanket amount. I am wondering about the salary of reservists. It cannot be all the same.

Commodore Blakely: No. The salary of a reservist basically tracks that of a regular force member. They get 85 per cent of base pay. If they are a commodore, Pay Level Incentive 3, they get 85 per cent of what a regular force commodore at Pay Level Incentive 3 gets. If they are serving on class B, they get 85 per cent as well. If they are serving on class C, either in a ship or in an aircraft or in taskforce Afghanistan, they earn almost the same pay as a regular force member.

Senator Manning: Does the 85 per cent versus the almost regular cause any concerns from the rank and file?

Commodore Blakely: I think the answer to that is yes. Many people say, "I am doing the same job; why do I not get the same pay?" Someone decided 85 per cent was the number, based on the fact that a reservist did not have to take a posting. A reservist could refuse to go somewhere and basically volunteer every time he put on his uniform. Is it a real number? No.

Senator Mitchell: I was surprised to hear that you had retired. I had not thought of that. It is recent. I am sorry to hear it, and I think the Canadian navy is diminished because of it.

Commodore Blakely: Thank you.

Senator Mitchell: Thanks very much for being here with us.

You made the point that the work on the human resources issues and benefits package is probably a lesser priority, given the intensity of needing to deploy people elsewhere.

Is it not also true that once you start working on these benefit packages in particular, that it will cost more money? Inevitably and inexorably, the focus is on getting A and B level benefits up to C, and C up to regular force. Is that not the case?

Commodore Blakely: Will it cost more money? The answer is yes.

Senator Mitchell: Is that the reason they do not pursue it?

Commodore Blakely: I do not believe so. For example, there was a time when someone said a reservist does not get a posting allowance. We went through a cycle. There was a grievance and we band-aided that one. We had the post living differential. We have gone through all these things, and eventually the reservist gets it.

I do not think it is about trying to save money. Every time an issue has arisen, the senior leadership of the Canadian Forces has done the right thing. The difficulty really has been how to put a team together for long enough to sort these issues out, given everything else that is going on.

Senator Mitchell: Some kind of a special task force of retired commodores could be structured to do that.

Commodore Blakely: I suppose they could get people who have an HR background. Admiral Roger Girard has more HR smarts than most. I am sure someone could tempt him away from Royal Roads University for eight months to fix many things.

Senator Mitchell: I am interested in your idea of a tax credit. It is very simple, and it just gets done.

Commodore Blakely: It just gets done.

Senator Mitchell: The only issue I would have with it is that smaller firms that do not make much money, or any at all, would not benefit much from a tax credit, and they may be the ones that are most disadvantaged by this regime.

Commodore Blakely: Then maybe their tax credit could be a little larger.

Senator Mitchell: It could be a refundable tax credit.

Commodore Blakely: Yes, a refundable tax credit.

Senator Mitchell: You mentioned a looming problem, if it is not one already. I am not sure what is evolving, but as the pressures of money and personnel evolve, there may be this critical point at which the reservists do not get enough hours to make it worth their while to stay.

Commodore Blakely: Yes.

Senator Mitchell: What is the trade-off? Could you not have a policy that says we will have fewer reservists and more hours for each?

Commodore Blakely: You could. The real difficulty there is the sunk cost in a reservist. We have a big sunk cost in an army lieutenant who is a qualified platoon commander and has some experience and some time in, like we have in a pilot or a ship driver. If you get rid of those people, you basically see your investment in them go out the door with them.

Could we have a policy where we basically could almost — I hesitate to use the word "contract," because that is not the right word, but we could have a covenant with the reservist that says, "If you are prepared to show up, we will give you 40 days' pay over the course of the winter." If we do not have enough money to do that, then maybe we look at not recruiting as many reservists.

Senator Mitchell: We could set up this covenant so they have something to depend on.

Commodore Blakely: Someone can do the math and say, "I will be able to buy groceries."

Senator Mitchell: You mentioned the difficulty, except for medical personnel, of integrating training in military training programs that are relevant to civilian life. In the way the training has been structured at this point, it has not been done on purpose, I am sure, to exclude it. Is there some kind of impediment that is difficult to overcome?

Commodore Blakely: In a few trades, the 500 series, the aero trades, we have managed to do that because the civilian side simply uses the military specs for the aero frame and that sort of thing. For plumbers and boilermakers and carpenters and whatever in the CE trades, we have a pretty good handle on sorting that out. For the vehicle mechanics, we have managed to sort that out. However, here is a situation that actually happened to me. I had a chief petty officer first class, hull technician, who had been coxswain of a frigate and who wanted to transfer into the naval reserve. We do not have hull mechanics or hull technicians as a trade, so we would be prepared to offer this chief petty officer first class to come in as a leading seaman, which is a corporal, and start him in the diesel mechanic trade. That is rock headed. We do not need him to be down in the engine room shuffling around with an oilcan. We need this guy to be a leader of the institution. We are working through that stuff slowly but surely, but we have all these traps we have set for ourselves.

Senator Mitchell: You have to dodge them.

Senator Patterson: Mr. Blakely, I am intrigued with your comments on the future of the naval reserve and your speculation on a possible role with the Arctic offshore patrol vessels. I am curious about your ideas and if you have considered from where you might draw recruits for such a specialized role.

Commodore Blakely: I do not believe the role will be all that specialized. I think it is going to sea in ships. Some of the ice seamanship will have to be learned as add-ons. Basically, some of the crews of the MCDVs will migrate to the Arctic offshore patrol ships.

I believe that if Canadians know that there is a role for them in dealing with our sovereignty in the Arctic, they will show up. Canadians actually believe the Arctic belongs to us. Canadians know that H0H 0H0 is the postal code for Santa Claus, and he and the elves have to be Canadians.

If we build the ships, we will not have as much difficulty manning them as people think. Canadians believe in Arctic sovereignty and that would manifest itself in people actually volunteering to do it.

Senator Patterson: There might be a role for the rangers as well, but I thank you for those thoughts.

Commodore Blakely: The rangers have a tremendously important role. I do not believe their role will be at sea.

Senator Dallaire: You are established for 5,000; you have a pay ceiling of 4,000. You have eight ships out there with let us say 40 reservists on class B, that is 320, but you have 800 on class B.

Commodore Blakely: Where are they?

Senator Dallaire: Why that many on class B? Could that money allow you to increase your personnel size to put people on other systems than purely the MCDVs?

Commodore Blakely: Yes, there is the forced generation role of having people who are getting ready to step up to go. There are the two formation guards on both of the coasts, which are the standing port security units that provide on-water security for both Esquimalt and Halifax. That adds up to another 100 people. There are 100 people in the fleet school who are actually doing training. There are another 120-odd people employed in the naval reserve divisions across the country, and about 150 employed in National Defence headquarters working on the maritime staff.

Senator Dallaire: Can you go to 12 ships or not?

Commodore Blakely: I would have said yes a while ago; I am not so certain today. Sorry. I would be guessing.

The Chair: Thank you very much. You have been entertaining and informative. It is absolutely true that Santa Claus is Canadian. There is no question about that.

Commodore Blakely, thank you very much.

(The committee continued in camera.)

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