Carney government has no launch date planned for proposed sovereign wealth fund
Nearly six months after announcing plans to create a Canadian sovereign wealth fund, the federal government is still not sure when it will be launched, or how exactly it will work.
Finance minister's spokesperson says work is ongoing to create fund
Kate McKenna · CBC News
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Nearly six months after announcing plans to create a sovereign wealth fund, the federal government is still not sure when it will be launched, or how exactly it will work.
In April, Prime Minister Mark Carney said Canada will launch its first-ever national sovereign wealth fund, with seed funding of $25 billion over three years, to be called the Canada Strong Fund.
Carney said the fund will draw on international examples, such as Norway, but will invest only domestically, be arm's-length from the government and focus on funding major Canadian projects in fields such as energy, infrastructure, agriculture and technology.
The fund would work in conjunction with private investors and is expected to include a "retail investment product" for ordinary Canadians to buy into the fund. The details of how that would work have not been announced.
The plan was outlined in the spring economic update in April, but since then, the government hasn't said when it will roll out, nor has it announced who will be running the arm's-length agency responsible for administering the fund.
At the time it was announced, some experts criticized the proposal, noting there are already a number of federal programs available to finance and de-risk private sector projects.
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Similar federal programs such as the Canada Infrastructure Bank, the Canada Indigenous Loan Guarantee Corporation and the $15-billion arm's-length Canada Growth Fund already exist.
"I don't know why specifically there's a need to set up a special fund for this," said Dana Galizia, associate economics professor at Carleton University. "That doesn't mean it's a bad idea. It just means that, without the details, I'm not really clear on what the value is here."
It also faced criticism, notably from members of the Conservative Party, for being funded by debt. Other jurisdictions with similar funds, including Alberta and Norway, invest revenues from oil and gas. They are often used as a way to spend surplus money.
"Generally, sovereign wealth funds are generated from surpluses accumulated by the government," Conservative finance critic Michael Chong said on Tuesday. "The government of Canada is not currently in a surplus."
He added that the fund is "an example of many announcements the government has made that they either have either failed to provide sufficient financial information about or have failed to execute upon."
John Fragos, spokesperson for Finance Minister François-Philippe Champagne, said the upcoming fall budget will include a "significant" update on the sovereign wealth fund.
"In due course, we'll have outlined who the CEO will be, who the board will be. Reiterating that because this is a novel project, we can draw on best practices around the world and here in Canada and we can see what has not worked," said Fragos.
More work remains
In addition to needing to create a Crown corporation and appoint people to it, Fragos said the federal government has undertaken a mandate review of all of the federal investment programs to ensure they're not overlapping. The review is ongoing.
He said developing the "retail" component for Canadians to buy into the fund is also taking time, because it's a concept without an existing template from other countries.
Another potential element of the fund includes selling federal assets, such as opening up airports to private investment, and using that money to invest. But — again — the details of what exactly that looks like have not been made public.
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"I think there's a really interesting opportunity here with this fund, where you could take some of the proceeds from those sales and then you could use it to build the fund," said Colin Busby, director of policy engagement with the C.D. Howe Institute.
He also said, even if it's operated at an arm's length, the fund will need to consider what projects and companies get investments.
"By picking and choosing winners in very distinct parts of the country, it creates a bit of a hurdle and a bit of a political challenge for the government in doing so," Busby said.
ABOUT THE AUTHOR
Kate McKenna is a senior reporter with CBC’s parliamentary bureau in Ottawa, where she covers federal politics. She previously worked for CBC’s The Fifth Estate and in the Halifax, Montreal and Charlottetown newsrooms. Her investigative and breaking news coverage has won five RTDNA awards. She is the author of No Choice: The 30-Year Fight for Abortion on Prince Edward Island.
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