PM Carney announces sovereign wealth fund for major projects

Prime Minister Mark Carney unveiled Canada’s first national sovereign wealth fund Monday, saying it is an opportunity for Canadians to buy into major industrial projects.

Dubbed the Canada Strong Fund, the agency will target major Canadian industrial projects across sectors including energy, infrastructure, mining, agriculture, and technology.

The prime minister says the government will kickstart the fund with a $25 billion investment.

“This will be a Government of Canada fund, but more importantly, it will be a people’s fund — it will be your fund,” said Carney.

Individual Canadians will be able to invest in the fund, Carney comparing the process to purchasing government bonds.

Carney says returns will be put back into the fund to expand its capacity.

“Essentially, a national savings and investment account designed to grow wealth for future generations,” said Carney.

The Canada Strong Fund is expected to be set up as an independent, arms-length Crown corporation.

The establishment of this fund mirrors existing large sovereign wealth funds in nations like Norway and various Gulf states.

Federal Conservative leader Pierre Poilievre is critical of the idea, because the Carney Liberals are already running a large deficit.

“Carney has no surplus and therefore no wealth to put in such a fund,” said Poilievre. “He’s talking about a sovereign debt fund.”

McMaster economist Colin Mang says Carney’s proposal contrasts with funds in other countries.

“Typically sovereign wealth funds are financed by natural resource revenues, this is a little bit different,” said Mang. “The federal government is going to put $25 billion in and they’re going to have to come up with that money, likely through borrowing, because they already have a deficit. So it is a little bit different from the way that sovereign wealth funds are structured in other countries.”

Mang says it’s a one-time investment by Ottawa, so “the long-term implications are basically ‘nil there.”

He said he sees what is being proposed as more like a private-public partnership, which he says has the potential to be transformative.

“The government proposes to take an equity stake in a number of different projects and what that’s going to mean, is the profits from these projects will flow back to the federal government and that will be a new source of revenue,” said Mang. “This could be hugely transformational for the country.”

Monday’s announcement comes just one day before the government is set to table its spring economic update, to which the prime minister says will contain “good news” about the deficit.

With files from The Canadian Press. 

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