Many years ago, in a conversation with my Ph.D. supervisor and other faculty at the UVic Faculty club, my supervisor tabled the question - could any one of us spend $3 billion dollars and have nothing to show for it?
Almost everyone said "no". What ensued was a lengthy and lively discussion - an intellectual exercise.
But it had a real basis.
At the time, government spending practices had an error of around 3%. An audit of government finances showed that they could not account for 3% of our money.
And that was $3 billion dollars.
Since those days, the Auditor General has worked hard to ensure that there is better accounting for how the government spends our money. An open and accountable system is the hallmark of good fiscal management. Anyone should be able to look at the books and see where our dollars are going.
That is the principle to which most political parties aspire. At least when they are in opposition this seems to be their position. But something happens when parties rise to power.
One only needs to look at the Conservative's handling of the G8 and G20 summits or the Liberals sponsorship scandal to realize that being in seems power to lead to unrepentant abuses of the public purse.
It is the job of the Auditor General, then, to dig around in the financial dealings of the government to find such abuses and pull them out into the light of day for all to see.
For big purchases - the multi-billion dollar purchases that make the headlines - the government is particularly charged with ensuring that the financial implications are there for everyone to see.
With this in mind, the Auditor General's report on the purchase of the F-35 fighters is an eye opener. Not because it comments on the jets themselves but because of it chastises the government for the way that it has presented its case to the Canadian public.
And what has been more interesting still is the Conservative's defence of their financial practices lead by no other than Minister of National Defense Peter McKay. (One can only hope that Canada's military is better at defending our country than the Minister is at defending his government's actions!)
To recap, the Lockheed Martin F-35 Lightning II aircraft is a multi-purpose jet designed to be a fifth-generation fighter and the backbone of American air superiority for the next 50 years. It comes in three designations - designed to allow it to meet the demands of the various branches of the U.S. military.
Work on the F-35 started back in the 1990s with Canada's involvement, to some extent, since 1997. However, it was on July 16th, 2010 that Prime Minister Harper announced that Canada would purchase 65 F-35s to replace our existing fleet of 80 McDonnell Douglas CF-18 Hornets for a cost of $16 billion dollars.
That is some $246 million per jet if you simply divide the numbers.
But the government repeatedly said that the planes would cost between $70 and $75 million. Clearly, there are additional funds involved - life cycle costs or additional aircraft such as a new tanker fleet to fuel the jets in the air. It is not just the planes that we are buying but the whole package.
Indeed, the Department of National Defence said that the $16 billion in costs is over the lifespan of only 20 years. It is a life cycle cost.
This is key to the controversy that the Conservatives now find themselves embroiled in because last year, in March 2011, retired Assistant Deputy Minister of National Defence Alan Williams questioned the costs stating: "In reviewing the government material tabled on March 17, 2010 before the Parliamentary and House Affairs committee, it appears to me that the $75 million is not the "procurement cost" but rather the "unit recurring flyaway cost" which is merely part of the procurement cost."
Last year, just before Easter, the Auditor General pegged the costs for the F-35 at a total of $24 billion.
Minister McKay's defence? It is a matter of accounting practice. His contention was that the Department of National Defence did not provide life cycle costs or base its decision on the total costs of the fleet. But the accounting model that the Auditor General employed is exactly the one that the Department of National Defence used.
Minister McKay's response? The government knew the real costs all along. They just hadn't told parliament.
When asked in Parliament for the cost of a program, the government is supposed to respond honestly - not with prevarications or misleading information. It is not supposed to have one set of books that it uses and another that it reveals to the rest of us.
That is how money goes missing and errors occur.
