Last week, Prime Minister Mark Carney prefaced the Spring Financial Update by announcing that he would be creating a new sovereign wealth fund called the Canada Strong Fund. This fund is supposedly intended to invest in key strategic Canadian projects, such as energy transition and critical infrastructure, to generate wealth for future generations. The federal government is apparently setting aside $25 billion for this fund. Carney also said that average Canadians would be able to invest in this fund, kind of like a mutual fund.
In this announcement, Carney even had the gall to refer to Norway’s well known sovereign wealth fund as if this were comparable. Norway’s fund actually is a genuine sovereign wealth fund, as it uses surpluses generated from Norway’s energy industry to build up a fund that has reached an enviable US$2 trillion today. As well, Norway’s fund is forbidden from investing in Norway, to avoid the possibility of using this money for political pork barrel funding of projects within Norway designed to obtain votes. Carney’s new fund bears zero resemblance to Norway’s.
In contrast, Carney’s fund is being created by incurring more debt as the $25 billion initial “investment” will be borrowed. The fund will be completely invested in Canada; in projects the Liberals deem to be in Canada’s interests. This virtually guarantees it will be spent politically, not based on sensible economic or business criteria. We have seen this picture many times before, where government picks what it believes to be “winners”. The history of such funds has consistently shown they virtually always end up being losers and create additional tax burdens for Canadians while unfairly subsidizing preferred businesses with the tax dollars of other businesses that are competent enough to get along without government support.
Aside from criticizing the structure of this fund, a key question is why would it be needed in the first place? The Liberals from Trudeau on to Carney have created many funds over the years. For instance, the Canada Infrastructure Bank (CIB) has very similar goals to this new fund. The CIB was created in 2017, and its main accomplishment to date has been to cycle through several CEOs, all of whom were paid very generous salaries on the taxpayer dime. It has done little if anything to actually contribute to the Canadian economy. Back in the day, Canada seemed to do just fine – in fact better than we are doing today – investing in large projects without all of these funds. Never forget that every new fund will involve a highly paid team of executives and even more expensive bureaucrats to manage it.
There was also the infamous Green Slush Fund – proper name Sustainable Technology Development Canada (STDC). Once again, the STDC achieved infamy for its Board members directing taxpayer dollars to their own businesses, something that one would hope to be illegal yet no one ever faced consequences because of their outrageous theft from taxpayers. The Auditor General of Canada found this fund to be the source of 186 conflicts of interest and about $400 million in misused funds. The STDC contributed pretty much nothing of value to Canadians for all the money spent. The fact the new Canada Strong fund has “energy transition” as part of its mandate should ring all kinds of alarm bells for Canadians.
What is also glaringly obvious with Carney’s new fund is that details around how it will actually work have been non-existent. Even some journalists and others who usually support Liberals have pointed out that this fund seemed to be a last-minute addition to the Spring Economic Update with no due diligence on how it was intended to function. As our economy continues to decline under Carney, it seems like he believed a new shiny pony needed to be tossed at Canadians to distract them from the miserable state of inflation, the cost of living, food bank lines and unemployment, and did so at the last minute with little forethought.
Other elements of the Update were similarly unimpressive. Carney had said before the statement that it would contain some good news for Canadians. Folks would be hard-pressed to find any. Perhaps he was referring to the prediction that the deficit would decline from a gigantic $78.3 billion to a slightly less gigantic $66.9 billion. Such good news! Not that long ago, a deficit of $66.9 billion would have been considered outrageous, and deservedly so. The government also announced a huge spending increase of $37.5 billion over the next six years on top of existing excess spending. And don’t forget these are all projections, not facts. As the last 11 years of Liberal government have shown, they always miss their forecasts in a negative way. There is no reason to believe these numbers will come to pass either.
Trudeau was generally, and rightfully, viewed as a completely incompetent manager of our national finances and the immense amount of taxes Canadians are asked to pay. We have the massive deficit and debt to show for it. Despite Carney’s reputation as a shrewd financial thinker, he seems to actually be out-Trudeauing Trudeau. Bad news for Canada.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.
