Used Australian fighter jets could cost $1.1B: Parliamentary budget officer

Buying used Australian fighter jets to buttress the Royal Canadian Air Force is expected to cost taxpayers as much as $1.1 billion over the next dozen or more years, the Parliamentary Budget Office said Thursday.

That estimate, in a new analysis, is 22 per cent higher than figures presented by the Department of National Defence and will likely mean renewed criticism of the Liberal government’s plan.

Parliamentary Budget Officer Yves Giroux looked at the cost of buying 18 old F-18s, modifying them to Canadian standards, operating them until at least 2032 and disposing of them.

The warplanes, which are of the same vintage as the air force’s existing CF-18s, are expected to arrive in batches between now and 2022. The first two aircraft arrived recently.

DND planners estimated the cost would be up to $895.5 million.

The budget office figures it will be higher, running between $1.09 billion and $1.15 billion.

Giroux says the biggest difference between the two estimates relates to upgrading the fighters to Canadian standards.

Even still, he is puzzled by the disagreement. In preparing its estimate, the budget office used figures from the Department of National Defence and publicly available information.

“Why have they underestimated the cost? I wonder myself.” Giroux told reporters after the report was presented.

The answer, he suggested, may involve optics, because programs that slide in just under the $1 billion mark tend to generate less public controversy.

“The estimate we provided crosses the magical trigger of $1 billion life-cycle cost. They may have had an
incentive to lower the cost estimate,” Giroux said.

In a statement, National Defence said its cost was “extremely close to that of the PBO on the majority of line items,” but they differed on figures for the upgrade, as well as the notion of whether extra funds — known as a contingency —  should be set aside.

The department insisted the cost of improving the Australian jets is still up in the air. “We are still producing options for these upgrades,” said the statement.

Auditor general also challenged figures

Even still, the budget office is not the only one estimating that the program crack the billion-dollar mark.

Last fall, the auditor general also challenged DND’s figures.

Michael Ferguson’s last report estimated the purchase and operations cost would be roughly $1.02 billion.

Giroux, in his report Thursday, said the cost could go higher.

“The sensitivity analysis conducted within this report shows that prices could further change according to both project timelines and future flying-hour behaviour within the fleet,” the report said.

The Liberals have long insisted the air force needs extra fighters because it cannot at the moment meet both its NATO and full-alert North American Aerospace Defence Command commitments at the same time.

The used F-18s are considered a stopgap until the federal government purchases 88 new fighters through a competition that has yet to get going.