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Defence Minister Peter MacKay appears at a news conference in Halifax on April 10, 2012.Andrew Vaughan

Peter MacKay has explained the $10-billion discrepancy in the F-35 fighter jet purchase as Auditor-General Michael Ferguson's "new way of doing business."

The Auditor-General's new approach means that every procurement purchase must include costs for salaries of Canadian Forces members, fuel, food, "shoelaces" and "boot leather," the Defence Minister told reporters Tuesday in Halifax.

It means, he added, that the $33-billion shipbuilding contract – $25-billion of which was awarded to Halifax – would cost a lot more under the Auditor-General's calculations because it did not include "salaries of military personnel, fuel or oil or replacement of fuels."

Mr. MacKay was at CFB Halifax to make an announcement about enhanced benefits for ill and injured military. But he was bombarded with questions about the F-35 purchase, which Auditor-General Michael Ferguson criticized last week, noting that the cost of the jets is $25-billion compared to the Harper government's $15-billion price tag.

Mr. MacKay says that the Auditor-General used a different "calculation" to determine the final cost of the fighter jets.

"The $10-billion that he has described as not being disclosed was what you pay our current pilots, the gas that you put in the current fleet of CF-18s ... if you went out and bought a new mini-van and it was going to cost you $20,000 you wouldn't calculate the gas, the washer fluid, the oil and give yourself a salary to drive it for the next 15 to 20 years."

"Now that's part of the new calculation now," he said.

And from now on, he noted, the federal government will comply with the Auditor-General's recommendations to include all costs and to be more transparent.

Taxpayers were kept in the dark in terms of the jet fighter procurement process, according to the Auditor-General.

"If this is the way the Auditor-General wishes us to present the program costs in the future to include those salaries and fumes and fixed costs, we'll do so," Mr. MacKay said. "That is part of the lesson learned, it is part of the seven-step program we will now make available to the Auditor-General, parliamentarians and Canadians."

The government moved to put in a new process for the jet procurement as a result of the Auditor-General's report; Public Works Minister Rona Ambrose has now been put in charge.

Mr. MacKay says he is still a fan of the F-35s. He allowed that the government is looking at "all of the options" for new fighter jets but suggested the "direction we are headed" is the F-35 route since the government has been part of the jet procurement – or Joint Strike Fighter – program since 1997.