In a year when the federal government allocated more than $80 billion toward defence, funding for new submarines for the Royal Canadian Navy was noticeably absent from the 2025 budget.The federal government plans to replace its fleet of four aging diesel-electric submarines, only one of which is currently operational. Two companies have been shortlisted for the multi-billion-dollar project: ThyssenKrupp Marine Systems (TKMS) of Germany and Hanwha Ocean of South Korea.Officials have confirmed that while the procurement process is continuing, no funds have yet been set aside in Budget 2025 for the submarine acquisition..At a press conference in Ottawa, Defence Minister David McGuinty acknowledged the lack of funding, saying it is difficult to allocate money before the government has finalized pricing for the project. He said the submarine purchase remains part of Canada’s broader NATO defence commitments, which include increasing spending to 2 per cent of GDP by March 31 and preparing for further growth to 3.5 and 5% by 2035.Canada’s current submarines are nearing the end of their service life, with many parts no longer in production. .The planned Canadian Patrol Submarine Project is expected to be the largest overseas procurement in the country’s history, encompassing both the construction and long-term maintenance of new vessels. The Royal Canadian Navy has outlined key requirements, including Arctic capability, long endurance, stealth, and interoperability with allied fleets.McGuinty has stated that the winning bidder must use Canadian steel, technology, and labour where possible, and ensure the submarines meet delivery timelines and compatibility standards with NATO allies. .Analysts estimate the total value of the program could exceed $100 billion, much of it dedicated to maintaining and supporting the fleet over its lifespan.In October, Prime Minister Mark Carney toured Hanwha Ocean’s shipyard in Geoje, South Korea. The company has proposed building 12 KSS-III class submarines for Canada, estimating the cost at about $2 billion per vessel. Hanwha says it could deliver the first submarine by 2032 and three more by 2035, allowing Canada to retire its current fleet sooner and reduce maintenance costs..The company has signed agreements with several Canadian firms, including Babcock Canada, CAE, and Gastops, to integrate domestic technology into its designs.Two months earlier, Carney visited TKMS’s production facility in Kiel, Germany, where the company is building its new Type 212CD submarine. Backed by the German and Norwegian governments, TKMS expects to produce up to three submarines per year starting in 2027 or 2028. The company has indicated it would consider building part of Canada’s fleet domestically, though setting up a manufacturing facility could take up to five years..Germany and Norway have also proposed long-term cooperation with Canada on maintenance, training, and technology development, emphasizing shared NATO objectives.The lack of a dedicated funding line in Budget 2025 has raised concerns about the project’s timeline. Vice-Admiral Angus Topshee, commander of the Royal Canadian Navy, has warned that Canada is running out of time and that attempting to build the submarines domestically could cause major delays. He has pointed to South Korea’s decades-long process of developing submarine production capabilities from foreign designs as an example of how slow such projects can be..The government aims to select a contractor by the end of the year. McGuinty has said that once negotiations are complete, the funding plan will be announced.While the absence of submarine funding in this year’s budget does not necessarily indicate a policy shift, it has added uncertainty to Canada’s defence planning. With the current fleet expected to be obsolete by 2035 and the country seeking to reinforce its presence across the Arctic and three oceans, the need for new submarines is becoming increasingly urgent.Whether future budgets or supplementary estimates will include funding for the program remains unclear, but the central question persists: where is the money to replace Canada’s aging submarines?
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