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Old Apr 9th, 2012, 09:05 PM   #4731
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It was very clearly mentioned as -all- the costs, when the other parties and the PBO said this was going to cost far, far more. That, was the point. The cons made it sound as though that their numbers, was -the- cost, period. It's simply not the case.

The squirming by McKay now, is really just showcasing their total lack of credibility on this now.
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Old Apr 9th, 2012, 09:27 PM   #4732
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Like that is new

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Old Apr 9th, 2012, 09:43 PM   #4733
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Andrew Coyne: MacKay’s defence of F-35 price gap doesn’t add up

Monday, Apr. 9, 2012

‘The costs of an asset are the costs of the asset, not just the increment over what some other asset would cost’

For its part, the government did as little as possible to dispel that impression. Defence department statements at the time make no mention of maintenance or operating costs, but only the $9-billion cost of acquisition. The first acknowledgment of any additional costs I can find is the Oct. 19, 2010, appearance by the Assistant Deputy Minister of Defence (Materiel), Dan Ross, before the Commons Defence committee, in which he refers vaguely to “sustaining” costs of $250- to $300-million per year.

Multiply $250- to $300-million a year times 20 years and it works out to the $5.7-billion (slightly less than the $6.9-billion in the Globe story) that later appeared in the Defence department’s response to the Parliamentary Budget Officer’s report. Again, the government did not contradict this figure, either then or through the election campaign that followed.

But if the government could rely on public ignorance to sustain a misleading impression then, it cannot do so now. I refer to MacKay’s attempts to suggest that the Auditor-General’s insistence that all operating costs should be included in the total is some kind of new or persnickety standard that has suddenly been thrust upon his department. “This is the way that accounting has been always been done for major procurements,” he told his Question Period interviewer. “We do not calculate as part of the acquisitions costs what we pay military personnel. Or the fuel. Or the cost of keeping that existing equipment running.”

That may be true: It certainly fits with what we know of Defence’s tendency to lowball cost estimates. But it is directly contrary to longstanding Treasury Board directives, which stress throughout that the costs of any acquisition must include “all relevant costs over the useful life of the acquisition, not solely the initial or basic contractual cost” (Contracting Policy, 2006). Among the costs deemed “relevant” are those related to “planning, acquisition, operating and disposal,” including forecast “modifications, conversions, repairs, and replacement.”

Specifically, an “acquisition decision that is based on the lowest purchase price but that ignores potential operations and maintenance (O&M) costs may result in higher overall costs,” it notes in Guide to Management of Materiel. Among the suggested considerations, in assessing operations costs: “Are all training costs included? Are the costs of fuel and lubricants included? Are all repair costs included?”

So MacKay’s claim that some costs can be left out of the total, whether because “that’s the way it’s always been done” or because these are costs “we’re paying right now,” i.e. on the upkeep of the existing fleet of CF-18s, is simply untenable. The costs of an asset are the costs of the asset, not just the increment over what some other asset would cost. It is interesting to know, when buying a car, how much it would cost to buy some other car, but in the end the car still costs what it costs.

‘For its part, the government did as little as possible to dispel that impression’

Indeed, an indication that the government knew this argument was bogus is that it included the operating costs it omitted from the public figures in its own internal estimates. As long ago as 2008, according to the Auditor-General, the government was budgeting $9-billion for acquisition costs on the project, plus $16-billion for operations, for a total of $25-billion.

Yet even these figures are vastly understated. The life-cycle costs of an asset are those it incurs over the whole of its useful life. Yet Defence’s figures are based on an arbitrary 20-year interval, not on the F-35’s actual projected life. The Parliamentary Budget Officer assesses this at 30 years, while the Auditor-General prefers 36 years. Take the midpoint between the two. Prorate the department’s estimate of operating costs over 33 years rather than 20, and you get a figure of, not $16-billion, but at least $26-billion. Add in acquisition costs of at least $9-billion (and probably more like $10- or $11-billion — but that’s another story), plus the two- or three-billion more the Auditor-General says should be included for attrition, upgrades and the like, and you’re looking at a total cost, all in, of something closer to $40-billion.

Not $9-billion. Not $15- or $16-billion. Not $25-billion. Forty-billion dollars. So far.
Andrew Coyne: MacKay’s defence of F-35 price gap doesn’t add up
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Old Apr 10th, 2012, 06:51 AM   #4734
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An interesting take on this issue, O-man. Andrew Coyne is a respected journalist who is open-minded and fair. I have seen him take various sides on various issues, so, he is not a supporter of any one party or ideology.

Paix, mon ami.
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Old Apr 10th, 2012, 07:56 AM   #4735
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In order to have the badge of good economic stewards, they need to show they can live up to this. So far, I haven't seen a convincing arguement that this government deserves it. And this, is a very clear example why, they shouldn't have it.

If I were to run my household finances the way they do, we'd be in serious trouble.

It's as if a business buys an expensive fleet of cars, without regard to it's suitability for it's job, and without any research or regard to what the costs of maintaining the fleet to the business over it's time of service.

And conservatives like to use the analogy of running things like a business don't they...
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Old Apr 10th, 2012, 07:58 AM   #4736
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Originally Posted by groovetube View Post
In order to have the badge of good economic stewards, they need to show they can live up to this. So far, I haven't seen a convincing arguement that this government deserves it. And this, is a very clear example why, they shouldn't have it.

If I were to run my household finances the way they do, we'd be in serious trouble.

It's as if a business buys an expensive fleet of cars, without regard to it's suitability for it's job, and without any research or regard to what the costs of maintaining the fleet to the business over it's time of service.

And conservatives like to use the analogy of running things like a business don't they...
Valid points, gt. I especially liked your contention that "In order to have the badge of good economic stewards, they need to show they can live up to this. So far, I haven't seen a convincing arguement that this government deserves it." Very true.

Paix, mon ami.
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Old Apr 10th, 2012, 08:13 AM   #4737
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Gen. Natynczyk says F-35 still best jet for air force - Canada - CBC News
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Old Apr 10th, 2012, 01:39 PM   #4738
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Canadians OK with higher taxes to fight inequality - Politics - CBC News

An interesting study. Now, this would be a wise use of tax dollars in my opinion.
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Old Apr 10th, 2012, 03:24 PM   #4739
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Canadians OK with higher taxes to fight inequality - Politics - CBC News

An interesting study. Now, this would be a wise use of tax dollars in my opinion.
This presents a serious dilemma for Stephen Harper.

On one hand a majority of Canadians support our social programs and even among some Conservative voters are willing to pay more to keep them viable. And very large majorities support higher corporate taxes and higher taxes on the very wealthy. That's a lot of voters.

On the other hand large corps and most of the 1% do not support this in any way, shape or form.

Just kidding, no dilemma. Harper will give the 1% what it wants every time, Canadian voters be damned.
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Old Apr 10th, 2012, 03:25 PM   #4740
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What are the conservatives going to do when the big tax cut swindle they pulled for years no longer works on people?
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