04/08/2012 12:03 EDT | Updated 06/08/2012 05:12 EDT

F-35: Defence Minister Peter MacKay Aware Of Extra $10B Cost Two Years Ago


OTTAWA - Defence Minister Peter MacKay says he was aware two years ago that it would cost closer to $25 billion to buy a new fleet of F-35 stealth fighter jets, but insists there was never any intention to mislead the public.

That's about $10 billion more than the nearly $15 billion the government has maintained would be the price of the 65 radar-evading aircraft.

In explaining the discrepancy during an appearance on CTV's Question Period, MacKay said Sunday that it was all a matter of a different interpretation of accounting practices.

MacKay said the higher number takes into account the ongoing cost of pilots' salaries and other costs associated with operating the current fleet of CF-18 jet fighters.

"Yes, and it was explained to me just that way, that the additional $10 billion was money that you could describe as sunk costs, that is what we're paying our personnel, and the fuel that is currently being expended in CF-18s, jet fuel, maintenance costs, what we are currently spending. So not part of a new acquisition," MacKay said.

Auditor General Michael Ferguson issued a scathing report last week that slammed the military for keeping Parliament in the dark on the true cost of the procurement.

He pegged the eventual cost of the project at $25 billion.

Ferguson also suggested to reporters that cabinet ministers would have known the true cost of buying the new planes was much higher than the numbers they were using publicly.

A senior Defence Department official, who would only speak on condition of anonymity, said Sunday the military didn't want to include the ongoing operating costs of maintaining a fleet of fighters jets because that would have misled Canadians on the true cost of the new jets.

The official said that would allow Canadian taxpayers "to think we delivered a lot more plane than what we actually are delivering."

The official said the military's hand was forced by the auditor general, so now those costs will be included in this and future procurements.

"Governments don't do this simply so we don't mislead Canadians. Now we're being accused of misleading Canadians because we haven't put that out there," the official said.

"Any soccer mom in the country knows that their purchase of a mini van does not include gas over 20 years or a salary for driving it."

MacKay said it has never been the practice to include such things as salaries, fuel costs "or the cost of keeping that existing equipment running" in the price of a new capital procurement.

The Harper government froze all spending on the F-35 project and created a special secretariat of deputy ministers to oversee the way forward, effectively stripping Defence of its lead role in the process.

"I think we are being held to account and that's why we have acted very quickly with this comprehensive plan to correct any information flow," MacKay said.

The Conservative government has faced heated attacks from the opposition, including calls for ministerial resignations.

MacKay dismissed a suggestion that he should resign over the matter.

"Money has not been spent, there is no money missing, this isn't a sponsorship-type scandal where money is unaccounted for or stolen. This is money that was put into a budget, in an envelope, that is now frozen," MacKay said.

Nothing will be spent until "greater information has been laid before Parliament and the Canadian people."

Opposition MPs appearing on the same program rejected MacKay's explanation of the higher figure.

NDP critic Jack Harris accused the government of deliberately misleading Canadians on the true cost of the project, including during last year's federal election campaign.

"They can't paper this over. This is going to haunt them," said Harris.

Liberal MP Ralph Goodale echoed that criticism.

"There's no way Mr. MacKay can explain this away," said Goodale.

"And quite frankly this buck doesn't stop with Mr. MacKay. This issue is for the prime minister. It is the prime minister who knew every minute detail of this file."

MacKay said the government remains committed to replacing the CF-18s with the new F-35 stealth fighters. The government hasn't signed a contract, but it has signed a memorandum of understanding (MOU). The minister suggested that backing out of the plan to buy the F-35s could be costly.

"There's an MOU, so we are in a process that has been underway for some time, there would be costs associated with withdrawing from that in terms of our place in the production line and the delivery of new aircraft," he said.

"There would be consequences for withdrawing from it. But it's not prohibitive, there is not money that has been spent."

Also on HuffPost

Photo gallery F-35 In Action See Gallery
Photo gallery AG Report Highlights See Gallery