MacKay flubbed Libya costs

Ostensible Defence Minister Peter MacKay dramatically underestimated the cost of last year’s Libya intervention, incremental cost figures released with the DND 2012-13 Report on Plans and Priorities show.

In June 2011 MacKay told Canadians that the incremental cost of the Libya mission from March 2011 to the end of September would be approximately $60 million. The mission was eventually extended for one additional month, ending officially on 31 October 2011.

The figures in the Report on Plans and Priorities show that the actual incremental cost of the mission was $99.8 million, almost $40 million more than MacKay estimated. [In a press conference on Friday, May 11th, DND stated that the final incremental cost was actually $103.6 million.]

Part of that difference — probably about 15% — can be explained by the one-month mission extension. But even when MacKay’s estimate is increased accordingly, i.e., to about $70 million, it still falls $30 million short of the mission’s actual cost.

The Rideau Institute warned in June 2011 that the mission costs would likely be much higher than MacKay had estimated, suggesting that the actual incremental costs were more likely to be in the $80-85 million range. In the end, even that estimate was too low. But when also adjusted by 15% to account for the mission extension, i.e., to about $92-98 million, the Rideau Institute estimate turns out to have been much closer to the final figure than MacKay’s estimate was. In fact, almost dead on.

MacKay discussed the Rideau Institute estimate in an exchange with former defence minister John McCallum during a hearing of the Standing Committee on Government Operations and Estimates on June 14th, 2011:

McCallum: My next question has to do with the cost of the Libya mission. Again, I’m a strong supporter of that mission, but in terms of cost, I think your number was approximately $60 million for the full six-month period.

MacKay: That would be, yes, the extension, presuming that the vote–

McCallum: But the Rideau Institute and others have said that the true cost is significantly greater than that. What do you include in the cost? Do you include depreciation on the planes or salaries of military people? And what is the per-unit cost of these smart bombs?

MacKay: They’re incremental costs, firstly, so they don’t include such things as depreciation or salaries. That is not normally part of what would be considered incremental costs when it comes to the mission. So the Rideau Institute, as so often is the case, is wrong.

Actually, the estimates provided by the Rideau Institute were explicitly for incremental costs only, so it was Peter MacKay who was wrong on that point, just as it was Peter MacKay who turned out to be wrong about the actual cost of the mission.

…As so often is the case when it comes to Peter MacKay and cost estimates.

What exactly is it that he does over at DND again?

Update:

On the same day as MacKay made his comments, Chris Alexander, the Parliamentary Secretary to the Ostensible Defence Minister, discussed the Rideau Institute estimate in response to a question from NDP defence critic Jack Harris in the House of Commons:

Harris: Mr. Speaker, we have heard some figures on the cost of this mission. The total cost estimate is $60 million. Today, the Rideau Institute has questioned that figure, saying that it is more likely to be in the range of $80 million to $85 million. We know the government is not that good with numbers when it comes to military costs and expenditures. Could the member tell us where these numbers come from and how he supports their accuracy?

Alexander: Mr. Speaker, the numbers are very accurate. We have no reason to doubt the professionalism of the Canadian Forces in accounting, as in the other fields it must master to mount an operation like this. The cost translates into roughly $10 million per month. If it changes, we have every intention of informing this House.

Thanks for that, Chris. You were just as convincing (and just as correct) when your job was to tell everyone how well things were going in Afghanistan.

News coverage:

Lee Berthiaume, “True cost of Libya mission was seven times gov’t. estimate: documents,” Postmedia News, 10 May 2012

Tom Perry, “Libya mission’s final costs reach $347M: Mission’s incremental cost nearly $100M, double MacKay’s update in October,” CBC News, 11 May 2012

Murray Brewster, “Military defends MacKay over Libya bombing campaign cost confusion,” Canadian Press, 11 May 2012

Lee Berthiaume, “Military brass says MacKay knew full estimated cost of Libya mission,” Postmedia News, 11 May 2012

Campbell Clark, “Military defends MacKay as bill for Libya mission more than doubles,” Globe and Mail, 11 May 2012

Photo credit: DND

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