Reality Check: Can Canada pass on the F-35s with no impact?

by James Armstrong (feat. David Perry)

Global News
September 21, 2015

Associated Video

Liberal leader Justin Trudeau says a Liberal government will cancel the planned purchase of the controversial F-35 fighter jets and instead invest that money in the Navy.

He said over the weekend that there would be no penalty for not buying the F-35s, and maintained on Monday that Canada is under no obligation to do so.

“There is no contract right now for the F-35s,” Trudeau said. “We were part of the international community contributing to the development of it and got jobs through it, but we were never obliged to actually purchase the F-35s.”

But is that correct? Yes and no.

Canadians companies wouldn’t lose current projects, but they wouldn’t be able to bid on huge amounts of future opportunities.

Canada is part of an international group that’s building a slate of F-35 fighter jets. As part of that coalition, Canadian companies are able to bid on, and have received, hundreds of millions in contracts. In a 2014 report, Canadian companies have received $637 million so far.

And they could win at least $10.6 billion over the next 25-40 years – if Canada buys the jets.  If the government chooses to withdraw from the program, they would lose out on those contracts.

“If we withdraw from that program then Canadian companies would no longer be eligible for that work,” Dave Perry, a senior analyst at the Global Public Affairs Institute, said in an interview Monday.

But if Canada buys a different plane instead, that loss could be offset.

“If you went another route and acquired a different aircraft using the traditional model using a dollar-for-dollar offset, you could guarantee a potentially higher dollar-value worth of work that would accrue from whatever Canadian industry would do in support of those acquisitions,” Perry said.

Canada’s defence procurement rules force foreign companies to invest 100 per cent of the contract’s value in Canada, Michael Byers, a Canada Research Chair in Global Politics and International Law at the University of British Columbia said during an interview.

So if a foreign company wins the contract, that money is still getting to Canada.

“So put it head to head, the benefits that the Harper government says it’s going to get from the F-35 in terms of industrial development, versus the industrial regional benefits, the normal system, out of competition, and I suspect they’re pretty even,” Byers said.  “They’ll come to Canada, those $10 billion regardless of which plane is chosen.”

Montreal, which includes Trudeau’s riding of Papineau, would be among the cities most affected by the government not buying the F-35s.

Conservative leader Stephen Harper, whose government initially pledged to buy 65 F-35s before backing out in favour of a review, didn’t hold back when criticizing Trudeau for his announcement, saying Trudeau’s plan would lead to lost business and shows a “profound lack of understanding in the Canadian economy.”

“The Liberal Party is living in a dream world if they think we could pull out of the development project of the F-35 and not lose business. I don’t know what planet they’re living on,” Harper told reporters while taking questions in St. Jacob’s, Ontario, Monday morning.

“This is incredible the Liberal Party says they want to create jobs, build our manufacturing sector. The single, biggest, direct thing the government of Canada does in the manufacturing sector we do is government procurement, and particularly we do defence procurement.”

NDP leader Tom Mulcair too was critical of the Liberal leader saying his announcement was “one of the more surprising things that I’ve heard Mr. Trudeau say.”

“When he says things like that, he’s just showing his total lack of experience. That’s just not the way these things work,” Mulcair said. He did not, however, say whether the NDP would go ahead with buying the F-35s.

And Byers echoed Mulcair saying writing off one plane for political purposes is a bad decision, suggesting instead Lougheed-Martin, the maker of the F-35, should be able to compete in an open bidding process.

“I think that Justin Trudeau has made a mistake here, I think the next government, or the Harper government… shouldn’t rule out any one plane based on its own political assessment,” Byers said.