Carney announces creation of Canada’s first sovereign wealth fund

Prime Minister Mark Carney has announced his plan to create Canada’s first sovereign wealth fund.

The “Strong Canada Fund” will serve as an investment vehicle to finance major projects of national interest and will work in partnership with the private sector, Carney said in a video posted online.

Carney said in the video that Canadians will be able to contribute to and benefit from the fund.

“If you have a bit of extra money, we’ll make it easy for you to invest in the fund to help build Canada strong for all,” he said.

At Monday’s press conference at the Canadian Science and Technology Museum in Ottawa, Carney said the fund will begin with an initial endowment of $25 billion.

“Over time, the fund will grow through asset recycling and reinvestment, creating even greater opportunities for future generations,” Carney said.

When asked where that $25 billion will come from considering Canada’s fiscal situation, Carney said the Spring Economic Update on Tuesday will deliver news that Canada’s finances are on a stronger footing than they were when Carney’s government projected a $78.3-billion deficit for the fiscal year just ended.

“In order for the numbers to be better, you have to be on top of them, and we are on top of them,” Carney said. 

The recent spike in the price of oil, due to the war between Iran and the United States and Israel, has boosted revenues in Canada’s oil-producing provinces and in turn boosted how much revenue the federal government has collected. 

This time will be different, Carney says

Carney said the Canada Strong Fund will be managed by an arm’s-length independent Crown corporation that will report to Parliament, and his government will spend the next few months consulting on “specific aspects of the fund.”

Describing the fund as “essentially a national savings and investment account,” Carney said the fund is being designed to “grow wealth for future generations.”

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

Carney also said that like the Canadian Pacific Railway, the major projects his government is trying to get built will mostly be constructed by private companies.

Just like in the 1870s, Carney said “the federal government will support these projects through loans,  grants and other incentives.”

Carney evoked the spirit of major infrastructure projects that defined Canada’s history, but said the proposed plans would be different from things like the Canadian Pacific Railway, which was built by displacing Indigenous peoples from their land, where workers laboured under “appalling conditions” and the only people who benefitted from the projects where the companies that built them. 

Carney said Indigenous peoples will be full partners in the projects through equity stakes; that the projects being financed will be built by Canadians in “high-paying union jobs”; and because the government is investing in the fund, all Canadians, whether they invest directly or indirectly as taxpayers, will benefit.

Projects of national interest

Bill C-5, Carney’s legislation to speed up approvals for major infrastructure projects identified as being “nation-building,” passed through Parliament last June.

The second half of the bill, the Building Canada Act, enables the federal cabinet to pick projects, approve them upfront and override federal laws, environmental reviews and the permitting process.

The legislation speeds approval times from five years to two by introducing a “one project, one review” approach instead of having federal and provincial approval processes happen sequentially.

The Major Projects Office (MPO), which Carney created last August, is the central place to make pitches, deliver complaints or express concerns about major projects.

When he announced the MPO, Carney said it would “help structure and co-ordinate financing from the private sector, provincial and territorial partners” and the federal government to ensure taxpayers get value for money. 

Carney said the projects being financed through the fund will not be limited to ones of national interest, which have to meet certain benchmarks to get that classification.

“It wouldn’t be restricted to that, in my judgement. We’ll consult on the specifics of that, so it’s a broader range than would be just specifically C-5,” he said on Monday.