{"id":40278,"date":"2026-05-11T11:26:11","date_gmt":"2026-05-11T11:26:11","guid":{"rendered":"https:\/\/www.europesays.com\/canada\/40278\/"},"modified":"2026-05-11T11:26:11","modified_gmt":"2026-05-11T11:26:11","slug":"a-wealth-fund-is-a-poor-substitute-for-real-reform","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/canada\/40278\/","title":{"rendered":"A \u2018wealth fund\u2019 is a poor substitute for real reform"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Prime Minister Mark Carney makes an announcement on the Canada Strong Fund, Canada’s first sovereign wealth fund, at the Canada Science and Technology Museum in Ottawa on April 27.Justin Tang\/The Canadian Press<\/p>\n

There are well thought-out policies. And then there are measures that seem to be based on something scribbled on a white board when a government wants last-minute ideas for a flashy news release. <\/p>\n

Prime Minister Mark Carney\u2019s announcement of a new Canadian sovereign wealth fund \u2013 deftly dubbed the Canada Strong Fund \u2013 is the latter. <\/p>\n

Mr. Carney\u2019s talking points around the new initiative are perfectly on brand for a prime minister who styles himself a nation builder. Seeded with an initial $25-billion from federal coffers, the fund will take equity stakes in \u201ckey, strategic Canadian projects and companies\u201d to help them move ahead or grow.<\/p>\n

At least some of the rest of the funding is to come from everyday Canadians, who will be able to pour their own savings into the new enterprise. The fund will have a mandate to pursue market returns for them, but Ottawa will guarantee retail investors\u2019 principal.<\/p>\n

Indigenous leaders say they\u2019re an afterthought in Ottawa\u2019s new sovereign wealth fund<\/a><\/p>\n

The details are hazy. As the Parliamentary Budget Officer pointed out last week, Mr. Carney has said nothing about how the fund will be governed, how it will choose projects to back or how it will work with the cacophony of federal financing institutions Canada already has.<\/p>\n

One thing is certain. Actual sovereign wealth funds invest on behalf of countries that have a surplus of revenue, usually from natural resources. Canada may have plenty of oil, gas and mining riches, but it has no such fiscal surplus. <\/p>\n

It will have to borrow to finance this umpteenth state financing structure, which makes it a sovereign debt fund. The difference matters. <\/p>\n

Norway, for example, another oil-rich democracy, created a sovereign wealth fund to help avoid the domestic economic distortions that commodity booms can generate. A surge of natural resource wealth, for instance, can cause a spike in the national currency, which can hurt other industries, such as manufacturing.<\/p>\n

Andrew Coyne: The Canada Strong Fund: a solution no one can describe, for a problem no one can identify<\/a><\/p>\n

Norway\u2019s fund tries to avoid these imbalances by investing the country\u2019s resource revenue surplus abroad. The goal is also for the fund to create long-term sustainable returns, so that future generations also benefit from the current oil wealth.<\/p>\n

Canada\u2019s debt fund would do much the opposite. It would, if anything, introduce a new distortion in the allocation of capital in the economy, distributing it to projects and companies hand picked by bureaucrats.<\/p>\n

Also, far from spreading the wealth across generations, it would add to the debt burden that will fall onto the shoulders of younger and future Canadians. <\/p>\n

Another issue: It\u2019s unclear why companies would want or need to invest in the new fund. If a project that Ottawa judges to be in the public interest isn\u2019t viable for the private sector, it might make sense for the state to take it on. But don\u2019t expect profit-driven firms to join in.<\/p>\n

If, on the other hand, a project is attractive for private investors, why not let them run with it? Instead, the fund Ottawa has in mind would invest alongside private entities, an arrangement that sounds a lot like the government subsidizing projects that would proceed anyway. <\/p>\n

It\u2019s also unclear how Mr. Carney would be able to keep his promise of market returns at, essentially, zero risk for retail investors. Ottawa has struggled with the market returns part in the past (cue the now-defunct Canada Savings Bond program, for example).<\/p>\n

That\u2019s not to mention that Canadians already have plenty of choice when it comes to investing, from mutual and exchange-traded funds to super safe options such as guaranteed investment certificates and high-interest savings accounts.<\/p>\n

Canada doesn\u2019t need another bureaucracy with the dubious mission of spurring private investment. It needs Ottawa to remove the obstacles that currently deter companies from investing in this country.<\/p>\n

A good place to start is reforming and simplifying the tax system to increase financial incentives to invest and make Canada a top competitor for global capital. Another priority, as this space has argued before, is broad regulatory reform.<\/p>\n

The Carney government should wipe its sovereign wealth fund idea off the white board. Instead, it should sharpen its pencils and focus on the \u2013 admittedly painstaking and much less flashy \u2013 work of tweaking the tax and regulatory framework that keeps investors at bay.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Prime Minister Mark Carney makes an announcement on the Canada Strong Fund, Canada’s…\n","protected":false},"author":2,"featured_media":22719,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[164,224,238,214,212,239,17,211,230,231,227,213,210,235,171,234,143,222,249,215,216,229,225,226,219,240,220,244,245,247,242,246,94,243,217,142,233,113,232,241,223,236,237,228,221,218,248],"class_list":{"0":"post-40278","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-canada","8":"tag-alberta","9":"tag-arts-news","10":"tag-bc","11":"tag-breaking-news","12":"tag-breaking-news-video","13":"tag-british-columbia","14":"tag-canada","15":"tag-canada-news","16":"tag-canada-sports","17":"tag-canada-sports-news","18":"tag-canada-trafficcanada-weather","19":"tag-canadian-breaking-news","20":"tag-canadian-news","21":"tag-economy","22":"tag-education","23":"tag-environment","24":"tag-federal-government","25":"tag-foreign-news","26":"tag-globe-and-mail","27":"tag-globe-and-mail-breaking-news","28":"tag-globe-and-mail-canada-news","29":"tag-government","30":"tag-life-news","31":"tag-lifestyle","32":"tag-local-news","33":"tag-manitoba","34":"tag-national-news","35":"tag-new-brunswick","36":"tag-newfoundland-and-labrador","37":"tag-northwest-territories","38":"tag-nova-scotia","39":"tag-nunavut","40":"tag-ontario","41":"tag-pei","42":"tag-photos","43":"tag-political-news","44":"tag-political-opinion","45":"tag-politics","46":"tag-politics-news","47":"tag-quebec","48":"tag-sports-news","49":"tag-technology","50":"tag-travel","51":"tag-trudeau","52":"tag-us-news","53":"tag-world-news","54":"tag-yukon"},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/40278","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/comments?post=40278"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/40278\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media\/22719"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media?parent=40278"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/categories?post=40278"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/tags?post=40278"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}