upgrade to the F-18
The F-18 Phase Two Upgrade Program for Boeing will cost $2.6 Billion and the Aurora reconnaissance plane upgrades will cost $1 Billion respectively per year for five years for the Part One budget. This will include high-frequency radios, new navigation and communications equipment (“Auditing the CF-18 IMP — CF-18 Incremental Modernization Project,” 2004). As the program upgrades will ultimately carry on until 2021 when the new F-35’s come totally online, the Part Two budget will cover the second five-year span. The February inflation rate was set at 2.6% (“Canadian Inflation Rate Edges Lower In February” 2011). Certainly, this is at the low end of the spectrum, Conservatively speaking, the group feels that the program should include a 4% per anum calculation for the rate of inflation which would translate into 104,000,000 CAD for the F-18 upgrades and 40,000,000 CAD per year to allow for in the Aurora budget.
The Aurora upgrades will include high-frequency radios and new navigation communications equipment. Structural airframe upgrades will also be necessary keep the system flying until the projected end of lifespan of 2021(“Canada reconsiders Aurora upgrade” 2007). Since the new F-35 will be taking on Aurora reconnaissance roles, the upgrades are necessary because without them, a new reconnaissance aircraft would have to be purchased for the interim. The Aurora upgrades are necessary not just for the Ministry of Defence, but for other areas of Canadian monitoring for the Navy (watching out for foreign vessels challenging Canada’s sovereignty) as well as watching for illegal fishing, polluters and drug smugglers. It is an aging, multirole reconnaissance aircraft that is a workhorse and needs to be kept in top condition to weather the large amount of use it is put to.
The total defense budget is 19 Billion CAD. While respectfully acknowledging that all of the Canadian services are important, the Air Force has a multirole purpose that includes surveillance and defence of Canadian airspace over land and sea. Its multi-mission role in supporting various civilian as well as military purposes, the Air Force should command its share of the budget.
Proposal for Replacing the F-18 with the F-35.
Arctic Defense Focus
One of the primary requirements of the CF is to defend the Arctic. It is of the group’s opinion that this is primarily a surveillance problem and the F-35 would replace both the F-18 and the slow Aurora reconnaissance aircraft and obviate the need for their upgrades as well. This is not just the problem of Canada, but also other Arctic Allies such as Norway who are buying 48 of the F-35’s (Huebert 2010, 1). Effectively, Norway has preempted Canada’s decision already. We have to be able to cooperate and have interoperability with our NATO allies.
Criticism of the PBO Report.
The main opposition to replacing the F-18 with the F-35 is cost. This was the main criticism of the Parliamentary Report on the F-35 acquisition, namely that there was no way to estimated the future cost of the F-35. The PBO report was based upon 2009 Canadian dollar to U.S. dollar exchange rates (Office of the Parliamentary Budget Officer 2011, 35).
However, this group is critical of the above position. Bloomberg is positing a surge in the value of the Canadian dollar which is closely pegged to the price of oil which in turn is skyrocketing due the continuing overall crisis in the Arab countries (especially Libya) (Harris 2011). This trend in conjunction with a continued world demand for oil will certainly continue into the future and should bring more buying for the Canadian dollar in the U.S. For the F-35 mitigating cost increases. This makes it wise to take advantage of the window of opportunity and buy while the price is low and then Canada has a new multi-role fighter without having to upgrade current systems like the F-18.
Practically speaking, the difference in the total project costs in CAD between the Department of National Defence Program-based Analysis and the PBO Estimates are 14.6 billion CAD from 2016-2022 (“Next Generation Fighter Capability” 2011). The difference averages out to 2.43 billion CAD per year. For instance, Between March and August of 2011 will increase in value in relation to the U.S. dollar by 10% (“Canadian Dollar Currency Exchange Forecast.” 2011.) Logically, given the insatiable increase in world oil demand as against foreseeable supplies would indicate that the increase in oil prices as a variable will give the Canadian dollar increased buying potential over the U.S. dollar for the lifespan of the project that will offset project cost increases.
Based upon the need for an Arctic defence focus and cost analysis the F-35 is a good choice for the Canadian Forces. It will combine the needs of the F-18 and Aurora programs into one package.
“Auditing the CF-18 IMP — CF-18 Incremental Modernization Project.” December,
2004. http://www.casr.ca/id-cf18-oag1.htm (accessed March 21, 2011).
“Canadian Dollar Currency Exchange Forecast.”
2011. http://www.forecasts.org/cdollar.htm (accessed March 21, 2011).
“Canadian Inflation Rate Edges Lower In February.” March 18,
2011. http://www.rttnews.com/Content/USEconomicNews.aspx?ID=1578775&SM=2 (accessed March 21, 2011).
“Canada reconsiders Aurora upgrade.” November 3
2007. http://www.c4isrjournal.com/story.php?F=3081566 (accessed March 21, 2010).
Harris, Alexandra. “Canadian Dollar Strengthens as Crude Oil Price Increases to 29-
Month High.” March 8, 2011.http://www.bloomberg.com/news/2011-03-07/canadian-dollar-trades-at-almost-a-three-year-high-as-crude-oil-climbs.html (accessed March 21, 2011).
Huebert, Rob. Welcome to a New Era of Arctic Security. Canadian Defence and Foreign Affairs Institute. Calgary, AB: 2010.
“Next Generation Fighter Capability.” March 18,
2011. http://www.forces.gc.ca/site/pri/2/pro-pro/ngfc-fs-ft/comparison-comparaison-eng.asp (accessed March 21, 2011).
Office of the Parliamentary Budget Officer. An Estimate of the Fiscal Impact of Canada’s Proposed Acquisition of the F-35 Lightning II Joint Strike Fighter. Ottawa, ON: Canadian Parliament, 2011.
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