As other political bloggers know, there’s no feeling quite like vindication without attribution. Which I felt this week after parsing the latest data from Public Works and from the Parliamentary Budget Officer on the cost of the Joint Support Ship. A couple months ago, I predicted that the true cost of the ships project — unless it was drastically scaled back, which I think is a strong possibility — would exceed $100 billion.
An update to that estimate is in order, but in broad brush strokes, the upshot is that I was basically right. It’s worth recalling that the Canada First Defence Strategy officially pegged the cost of all “major replacements” — tanks for the army, ships for the navy, and F-35s for the air force — at just $20 billion. Whoops. That was followed up by a National Shipbuilding Procurement Strategy promising replacement warships, supply ships, Coast Guard ships, offshore patrol ships, and a brand new icebreaker, all for $35 billion. I ran over the figures, compared them with the costs of new destroyers in other countries, and said that it seemed suspicious. But I didn’t question them.
The Parliamentary Budget Officer has released what will probably be his final major report, which relates to the Joint Support Ship part of the purchase. This started out as a Liberal plan to buy three new supply ships (since that’s what we used to have right now), then became a Conservative plan to buy two supply ships. It’s still two, but the ship capabilities have been drastically scaled back and the price tag has ballooned to an astonishing $1.3 billion each. Given that one of the ship designs in the running is apparently a German ship that cost their navy less than half a billion euros, I can’t see how this figure is even plausible. But it’s worse than that: Kevin Page says that due to inflation and cost overruns the true cost of the supply ship contract may grow from $2.6 billion to $4.1 billion.
How likely that is I really don’t know, but if the same ratio holds true for the rest of the shipbuilding strategy, then initial construction costs would grow from $35 billion to $55 billion.
The next set of costs are for operations, sustainment, and maintenance. The government previously stated that it would cost about 1.5 times as much to operate the offshore patrol ships for 25 years as it did to build them in the first place. The new data say that the 30-year operating cost of the supply ships will be 1.7 times that of the initial purchase price. So my guess that this was a relatively useful ratio appears to hold true.
Which means that over 30 years, “$35 billion” in new ships would cost about $60 billion to operate. And that original purchase price may balloon to $55 billion, if the PBO estimates are to be believed.
All of which, taken together, mean that my initial estimate appears to be confirmed: the total cost of the new naval project proposed by the Harper government, at least as described so far, exceeds $100 billion.
I think we could colonize Mars for that price.Tweet