It’s too soon to start panicking about the shipbuilding strategy



by Tom Ring

March 30, 2016

How did the National Shipbuilding Procurement Strategy end up where it is?

Much has been written recently about the NSPS — not much of it favourable. Readers tend to come away with the impression that Canada embarked on a $35-$50 billion endeavour that is doomed to fail. Behind schedule … already. Over-budget … already.

To be sure, any initiative that has the goals and ambitions of a program such as NSPS ought to be subject to considerable scrutiny. Healthy debate on matters of important public policy is vital to any democracy. But with several observers and pundits clamouring for the initiative to be completely scrapped, we should take the time now to examine where we are and whether the program really is failing to meet its objectives.

A detailed analysis recently published by the Canadian Global Affairs Institute tries to do just that. Of course, the NSPS faces considerable challenges — as you’d expect with a program of this size and scope. Criticisms of the program tend to fall into three categories: that nothing has been delivered; that project budgets are exploding and; that the partnership agreement with the two chosen shipyards is a badly-flawed deal for Canada.

Let’s start with the first criticism. No ships yet, it’s true — but construction is well underway (in fact, Seaspan started work today on the second Offshore Fishery Science Vessel for the Canadian Coast Guard at Vancouver Shipyards).

However, the first objective of NSPS was the revitalization of the shipbuilding industry in Canada. With almost $600 million invested in two shipyards, at no cost to taxpayers, Canada now has state-of-the-art shipbuilding facilities on either coast that will provide careers for thousands of workers for decades.

Second criticism: We can build the ships cheaper offshore. This assertion has the benefit of being possibly true — but in the absence of a mature vessel design, it’s absolutely unprovable. Given the size of the program, taxpayers should expect that any vessels we build are built with value-for-money in mind — while keeping the investment in Canada. That, by the way, is what virtually every other country would do. True, project budgets have grown, as we should expect with the passage of a decade or more since project conception. But construction estimates are independently verified, as are the shipyards themselves, to assess their efficiency against a world standard.

Third criticism: The partnership agreement is flawed. Many such criticisms may have an element of self-interest behind them. When the auditor general examined the program in 2013, after the Strategic Partnership Agreements were signed, he found no such fatal flaw. The agreements must, however, be carefully managed continually over the life of the program to ensure that there is equal sharing of both risk and reward. Public debate — and even criticism — should be welcomed, as it helps us find the appropriate balance.

The NSPS is a 25-plus-year undertaking that aims to rebuild both Canada’s shipbuilding capacity and Canada’s Navy and Coast Guard, in a way that delivers maximum economic benefits to Canada for the money being spent. Any objective assessment of the program will conclude that it’s far too soon to listen to the doomsayer conclusions offered by those with an interest in doing things a different way.

One final thought. In its recently released Defence White Paper, the Australian government announced a shipbuilding strategy that, for all the world, looks just like the NSPS.

Tom Ring is a Senior Fellow at the University of Ottawa’s Graduate School of Public and International Affairs and the former assistant deputy minister, acquisitions, at Public Works and Government Services Canada.

Photo Credit: iPolitics

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