A6 RED DEER ADVOCATE Thursday, Feb. 28, 2013
Budget officer takes aim at navy supply ships BY THE CANADIAN PRESS OTTAWA — The Harper government moved to blunt looming criticism of the navy’s long-delayed supply ship program and its marquee shipbuilding strategy by leap-frogging ahead of a critical report scheduled to be released Thursday by the parliamentary budget officer. Senior officials at Public Works, who oversee the National Shipbuilding Strategy, held a technical briefing Wednesday ahead of the release of a report that will declare the program to replace the navy’s 45-year-old supply ships as unaffordable given the inadequate $2.6 billion set aside by government for the purchase. The shipbuilding bidding process was seen as a model for future procurements when it was unveiled last year. Problems with affordability of the ships could add to the political embarrassment the government suffered over the purchase of new fighter jets. A report by Parliamentary Budget Officer Kevin Page will underscore the higher cost associated with building ships in Canada, as the government acknowledged, but senior Public Works officials, who spoke on background, insisted the program remains on track
to deliver two ships by 2018-19. Those officials conceded in the briefing that the vessels, which are still being designed, will be reviewed to see if they are affordable and raised the possibility that some capabilities could be scaled back. It was Page’s stinging criticism of the F-35 stealth fighter that ignited a political controversy which ultimately resulted in the Conservatives’ re-examination of the multibillion-dollar program. Page accused National Defence of low-balling the multi-purpose jet’s purchase and maintenance costs. That criticism that was backed up by the auditor general. Background material released Wednesday as part of the briefing shows the government may have learned its accounting lesson. Estimates for the full cycle cost of the new supply ships at $7.1 billion. Liberal defence critic John McKay dismissed the briefing as recognition that the government’s plans will not live up to the political hype. “They’re just trying to head off negative publicity,” he said Wednesday. The shipbuilding plans have been held up as an example of success, but over one year after the framework deal was announced there has been grow-
ing concern because no actual construction contracts have been signed and there are questions about the program’s ability to deliver the same number of ships as initially promised. The government trumpeted that 21 combat and seven civilian ships would be built. But officials acknowledged that the number is up for discussion and it will depend on the capabilities that both the navy and coast guard require. “It’s not really the number of hulls that will define capability, it’s each actual ship (and) what each actual ship will contribute to the fleet,” said one official. When the government announced it was proceeding with the support ship program, it said it hoped to build two, possibly three vessels. That was quietly dialled back in Wednesday’s briefing to a firm two ships. The supply ships, meant to replace HMCS Preserver and HMCS Protecteur, were first ordered by the Paul Martin government in 2004, but initial proposals by shipyards were deemed too expensive by the Harper government in 2008. The program was forced to go back to square one with a drastic scaling back of the capabilities the navy want-
ed for the ships. Page’s report is expected to show that when inflation is factored in, the new less capable ships will cost more than if the better equipped vessels scrapped by the Conservative government in the original plan. McKay was incredulous. “If they would have stuck with the original plan, sucked it up, they would be six years ahead of themselves, and navy would already have its ships,” he said. “The consequence now is we don’t know what we’re getting, when we’re getting it and how much it’s going to cost.” When the budget officer took aim at the F-35, the Conservatives counterattacked by questioning his numbers and methodology. Government officials said they haven’t seen an advanced copy of Page’s latest report, but insisted their own calculations are sound. The budget officer’s report used the existing supply ships and their capabilities as a jumping off point for their analysis and drew on documents at National Defence, the shipbuilding industry as well as a team of experts including naval specialists at the U.S. Government Accountability Office in Washington.
Banking protections under fire in EU trade talks: documents BY THE CANADIAN PRESS OTTAWA — A leaked draft of part of the Canada-Europe trade talks shows that Canada’s vaunted banking system is on the negotiating table. The Canadian Press has obtained the Feb. 1 version of the services chapter of the Canada-Europe trade deal that Europe has circulated to its member states. It shows Canada is struggling to maintain the traditional stringent standards it imposes to ensure financial stability and protect financial services in Canada from foreign control. “EU does not want to exclude financial services from the scope of performance requirements,” says notes written into the draft text. The documents also show Canada is resisting European Union attempts to weaken oversight of financial institutions — leading to a heavily contested text that is one more obstacle to completing an agreement with Europe soon. Both sides want more access to each other’s financial services markets. For Canada, the European market is a huge opportunity for big insurance companies located mainly in Ontario. And Germany in particular has been pushing for more financial services opportunities in Canada. But the documents show Canada is taking a cautious approach, and will only allow a more open market if Canadian authorities can block business activity that would put the financial system at risk. Canada’s caution is bumping up against an aggressive European drive for investor protections that have no strings attached.
CANADA
BRIEFS
Canada watching to see if border pact threatened by U.S. budget cuts OTTAWA — Canada will be watching closely to see if a massive scheduled budget cut in the U.S. this week will affect the Beyond the Border pact between the two countries, says Foreign Affairs Minister John Baird. About $85 billion in cuts are set to hit U.S. federal programs starting on Friday. Homeland Security Secretary Janet Napolitano said earlier this week there would be pain for the Canada-U.S. border because her department would have to cut 5,000 border patrol agents if the cuts go through. Baird said the deal is key to the prosperity of both countries. “We’re going to continue to be very, very focused on it,”he said Wednesday. “After March 1 we’ll see what the challenges arise. Obviously this is not the way Canada would prefer to make these types of budgetary decisions. “But it is what it is.” Prime Minister Stephen Harper and President Barack Obama signed the much vaunted border deal 14 months ago. It is designed to speed trade across the 49th parallel while protecting the North American continent from terrorist threats.
Visa officer tells board Asian man had links to crime VANCOUVER — A former Canadian visa
Canada wants the text to say: “A party may prevent or limit transfers ... through the equitable, non-discriminatory and good-faith application of measures relating to maintenance of the safety, soundness, integrity or financial responsibility of financial institutions or cross-border financial service suppliers.” But that section of text is in bright red, indicating — like much of the financial services portion of the agreement — that the EU has not yet agreed. “What the (European) Commission is doing: it feels obliged to wrestle Canada down,” said Jan Kleinheisterkamp, a senior lecturer in the law department of the London School of Economics, who follows the investorprotection discussions closely. Canada also wants to set up a special mechanism that would have governments resolve any disputes that arise from new forays into each other’s financial services sector. The draft shows the EU is somewhat open to a version of this idea, but has deep reservations for fear Canada will use the mechanism as an excuse to block legitimate European investment. European officials have not agreed to many parts of the Canadian text in this area. “EU has concerns about the potential for abuse of such a provision if it were to be used for reasons which are not prudential,” notes to the draft text say. “EU has concerns about the possibility to backtrack on GATS commitments,” the notes add, referring to the general agreement on trade in services, a World Trade Organization agreement that Canada and the EU have both signed. officer says red flag warnings of a Chinese man’s link to organized crime came up when he reviewed a file back in 1994 — but the man was still allowed into the country. Jean-Paul Delisle told Lai Tong Sang’s immigration board hearing that he was tasked with reviewing the man’s visa application and found links to triad activity, including gambling, prostitution and loan activity. Delisle, who was based in Hong Kong, told the Vancouver hearing that information from Macau police led him to believe Lai was the leader of a major Chinese crime syndicate, the Shui Fung, or Water Room, gang. He told the hearing he would have interviewed Lai to make a decision on the man’s application, but before that happened the man withdrew it himself. Lai, his wife and three children were accepted into Canada through another visa office two years later.
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