Canada fighter planes to cost billions more-report

Thu Mar 10, 2011 2:59pm EST

* Watchdog puts total cost at nearly C$30 billion

* Report adds fuel to election speculation

VANCOUVER, March 10 (Reuters) - Canada's planned purchase of 65 fighter jets will cost billions more than government has projected, according to a report released on Thursday amid speculation the country will soon face an election.

Opposition parties seized on Parliamentary Budget Officer Kevin Page's report, saying it was evidence the Conservative government was misleading voters about the multibillion-dollar deal with Lockheed Martin Corp (LMT.N).

The budget watchdog's report also came a day after the Conservatives were reprimanded for refusing to release financial details of planned prison construction projects that the opposition also says will cost much more than the government maintains.

The budget office estimates it will cost C$29.3 billion ($30.1 billion) to build and maintain the 65 F-35 jets over the next 30 years, a significantly higher tag than C$16 billion to C$18 billion the government has forecast.

The planes are expected to cost C$9 billion to build, but the budget office said after reviewing historical information it determined the cost of maintaining the aircraft will be much higher than the government has publicly estimated.

The government said in July it planned to buy the aircraft, developed under the Joint Strike Fighter program, funded by the United States, Canada, Turkey, Britain, Italy, Norway, Denmark, Australia and the Netherlands.

The F-35s will replace Canada's CF-18s, which are due to end their working lives in about 2020. The first of the new aircraft would be delivered in 2016.

The main opposition Liberal Party said the report showed the government's cost claims were "bogus," and they renewed calls to cancel the Lockheed deal and put the fighter jet contract out to competitive bids.

"This is an unconscionable amount of money. The Conservatives have once again misled Canadians about the real cost of their agenda," Liberal Dominic Leblanc told reporters in Ottawa.

Prime Minister Stephen Harper downplayed the report, saying he was "not going to get into the lengthy debate on the numbers" and the F-35s was the only acceptable option to replace the CF-18s before they become too old to maintain.

"This is the only fighter available that serves the purposes that our air force needs," Harper said in Toronto.

Page said his office was not passing judgment on the operational merits of the F-35.

Page also said that because Canada has not signed a contract to buy the planes, it is not under any legal obligation to pursue the deal if it does not want to.

The Conservative government is scheduled to present its federal budget on March 22, and the country could be pushed into a spring election if the legislation is voted down.

The Conservatives hold only a minority of seats in the House of Commons and need the support of at least one of the three opposition parties to help pass legislation. The budget bill is always considered a matter of confidence, and its defeat would immediately trigger an election.

($1=$0.97 Canadian) (Reporting Allan Dowd; editing by Rob Wilson)

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