The Chrétien cabinet agreed to proceed with the purchase of four used British submarines after the United Kingdom reduced the proposed price by more than 4%, according to newly declassified federal records.Confidential cabinet minutes from Jan. 4, 1996 show then-defence minister David Collenette told ministers he expected outside experts would conclude the proposed purchase was “a very good one for Canada.”Collenette also pointed to $21 billion in defence budget reductions since 1989, arguing that if Ottawa wanted to maintain armed forces, it had a responsibility to provide the necessary equipment.“The Minister of National Defence recalled that in the last cabinet discussion, ministers had generally agreed on the operational requirement for submarines but were concerned with the costs involved,” said the minutes, obtained through Access to Information.The records show the proposed price for the four Upholder-class submarines had fallen 4.3%, from $800 million to $765 million.“Mr. Collenette indicated the total purchase price for the four used Upholder submarines had dropped from $800 million to $765 million ($623 million for the submarines and an additional $142 million for support costs),” said the minutes.Collenette told cabinet that savings within the Canadian Armed Forces budget, combined with offsets and industrial benefits offered by Britain, meant the deal could be considered cost neutral.He described the submarines as “state-of-the-art” and sought cabinet approval to proceed.The government ultimately acquired the four vessels from Britain in 1998. They were renamed the Victoria class, with the first three entering Canadian service between 2000 and 2003.The fourth, HMCS Chicoutimi, caught fire while crossing the Atlantic in October 2004. Lt. Chris Saunders died and the submarine did not enter Royal Canadian Navy service until 2015.Cabinet records show ministers were concerned about how the submarine purchase would be received while Ottawa was cutting other federal expenditures.Collenette said the government should emphasize that the purchase would be financed through changes to navy programs and would not draw money away from other priorities such as health care..Then-human resources minister Lloyd Axworthy warned the purchase could nevertheless face criticism because of reductions to social programs.“If the cuts were implemented, the purchase of submarines would be criticized even if it were based on reallocation within the defence department,” said the minutes.Then-prime minister Jean Chrétien acknowledged the concern but said there were legitimate reasons for buying the vessels.“The Prime Minister responded that there were good reasons to purchase submarines and that the question was primarily one of presentation,” said the minutes. “However he acknowledged the social perspective was the principal argument against proceeding.”Chrétien said Collenette's negotiations with Britain had reached the point where Ottawa could argue the submarines were essentially being obtained at no additional cost.“The Prime Minister indicated that since the last cabinet discussion on the procurement of submarines in July 1995, the Minister of National Defence had continued negotiations with the United Kingdom to the point where the government could make the case that the submarines could be obtained basically for free,” said the minutes.“However he noted that there was a difference between making the case and having it well received.”The purchase was formally approved in 1998 with the Submarine Capability Life Extension project initially carrying an estimated total cost of $812 million.The aging Victoria-class fleet is now approaching the end of its operational life. The federal government says only one of the four submarines is currently seaworthy.Prime Minister Mark Carney announced July 6 that Germany's Thyssenkrupp Marine Systems had been selected as the preferred supplier for negotiations to acquire up to 12 replacement submarines, with South Korea's Hanwha Ocean retained as the reserve supplier. The final purchase price has not been disclosed.Thyssenkrupp has offered to reallocate submarines from existing German and Norwegian orders to allow Canada to receive its first four vessels by 2034.
