OK- cautiously, conceptually, I dig it. As an economy with so much coming in from natural resources whose prices and demand can fluctuate and which can be depleted over time, a sovereign wealth fund is a no-brainer. I'll want to see more details on execution, and what sort of investment profile they target. There's no reason Canada oughtn't be able to build up, over time, a pretty massive sovereign fund.
Liberal (Minority/Majority) Government 2025 - ???
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HavokFour
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I'm also interested in hearing more about how an everyday Canadian being able to invest into it. The way he spoke about it in the above presser sounds similar to a market-linked GIC.
Superannuation, but for mega government projects has my attention.
MilEME09
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Prime Minister Carney announces the Canada Strong Fund – Canada’s first sovereign wealth fund
At the core of this new strategy are nation-building projects – new ports, mines, and trade and energy corridors that will unlock our vast resources, secure our domestic supply chains, and enable us to sell to new markets across Canada and around the world.
Here's the press release, its a solid idea for sure that could lead to a lot of economic growth.
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I heard that its independence will be quite similar to the CPPIB, which has been rock-solid so far.
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Will be interesting to see how this is packaged up to the individual Canadian, ability to hold inside your RSP/TFSA, etc?
MilEME09
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As well what kind of rate of return can canadians expect? What are the tax implications?
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Yes, either an 'open' return yearly - meaning unlimited upside as well as unlimited downside, or, as @HavokFour pointed out, maybe a 'Market-linked GIC' type of investment product for set time periods - 2,3,5yrs with a guaranteed min and max and a fixed upside. If they go the 'Market-linked GIC' its an pretty conservative option that will most likely appeal to those with minimal risk appetites and investment knowledge. They are truly a 'buy and forget' tool.
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Be interesting to find out if it's going to be properly a sovereign wealth fund, or just a kind of bank.
Halifax Tar
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Thanks!Prime Minister Carney announces the Canada Strong Fund – Canada’s first sovereign wealth fund
At the core of this new strategy are nation-building projects – new ports, mines, and trade and energy corridors that will unlock our vast resources, secure our domestic supply chains, and enable us to sell to new markets across Canada and around the world.www.pm.gc.ca
Here's the press release, its a solid idea for sure that could lead to a lot of economic growth.
Agreed, I’m interested in details too.
Um… Tough to say in that given the explicit intent to link to major projects. That suggests a mandate difference that will necessitate some alignment with federal priorities at least some of the time. Details will be important.
Mm hm. Worth noting that creating this fund will also place on the menu a policy option of creating preferential tax treatment or other incentive for both individual or institutional investors.
If this was coming from most rando politicians my skepticism would’ve far higher. If there’s anyone whose head is filled with the right knowledge to make something like this effective and viable, it’s PM Carney.
Agreed. I won’t be surprised if there’s somewhat of a blend of both approaches and assets for the sake of diversification. But clearly the opening moves here seem postured to juice infrastructure. Turning that into returns on investment that can then be reinvested will be a trick.
I could see this being a mechanism by which government helps to signal confidence in the viability of certain projects to help spur the private sector, and then once a project is more advanced the government can unwind its stake to other investors.
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So if it can over gov't back bonds like any other agency then this might be the successor to the old Canada Saving Bonds...without the gov't administration challenges of physical bond certificates etc. By all means make them open for purchase in any RESP, RRSP, TFSA or other gov't account.
I've thought however that this should be wider than just resources. Every time the gov't is asked to bail out a company there should be an ownership stake provided in return which would be added to the fund. I don't actually want the gov't running companies in the private sector so can apply buy back options at loan price + stock gain differential at fixed intervals but that would be under the fund manager and not the government of the day selling assets to make a quick budget buck.
I'm also interested in how much offshore resource development is outside provincial control. Working in a landlocked province I don't see this aspect as much but I thought there was some direct federal revenue vs. provincial revenue from offshore wells. Regardless it'd be great if even a sliver of the tax revenue could be used to help add funds to grow....but unfortunately the current debt/deficits make debt repayment a higher priority than reducing income to me right now.
Lastly....does this provide an umbrella for other provinces and/or territories to set up a similar process under the federal tent? I don't see Quebec or Alberta changing process but what about the Yukon or NWT? Nunavut? Generating a revenue stream to this fund in exchange for a share of the pie? What about First Nations?
Overall I view this as a good thing in concept and provides a greater national source of funding separate from adding new taxes each time or bemoaning why private industry doesn't want certain risks.
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It will be interesting to see how this is set up. Could be along the lines of a 'private equity' fund into large projects that access for 'normal' people never see the light of day.
A couple of things that I don't want to see happen are:
1) Any sort of 'public' representation on the 'oversight board' - meaning habitual protestor/agitator invests one single 1$ CAD into the fund and then gains access to sit on the Fund Board and votes against any project/infrastructure that they are against.
2) Any sort of influence or 'guidance' from the Federal Government. The Fund must have as much freedom/independence to invest wherever and in whatever project in Canada that it deems worthy of investing in.
MilEME09
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Hopefully its set up similar to the CPP investment board with rigorous oversight
daftandbarmy
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To expand on my brief comment...
A conventional sovereign wealth fund itself is basically an ordinary investor, using capital from particular sources of revenue* or, generally, from net surpluses. The capital is mostly untouched (not withdrawn); the RoI is reinvested or becomes another source of revenue*. The investment profile should probably not be high-risk. (*Governments can pretend sources of revenue are earmarked for particular purposes, but functionally it's all one pot of money.) If what the government is proposing doesn't really fit this definition well, I suppose it's a political cover for whatever it is the government really wants to do.
Canada doesn't have a net surplus, which means except for enticing capital from other sources, the capital is borrowed. For the borrowed money, the gap between its RoI and what the government pays to service debt has to be a positive number or it makes no sense - might as well just borrow the money as needed for each investment. ("Investment" assumes it's not just a vehicle for transferring funds to favoured constituencies, including aboriginal groups and particular projects, while pretending it's not part of ordinary government spending.) Making money on the gap shouldn't be as difficult for government as for anyone else.
For capital enticed from other sources, the government is a publicly-funded and -backed enterprise competing with private enterprises for their customers. Generally this is a bad idea. Likewise, if it's just another version of the Canada Infrastructure Bank with a wider mandate for where it invests, it's in competition with all private lenders and is at least not a particularly good idea.
A conventional sovereign wealth fund itself is basically an ordinary investor, using capital from particular sources of revenue* or, generally, from net surpluses. The capital is mostly untouched (not withdrawn); the RoI is reinvested or becomes another source of revenue*. The investment profile should probably not be high-risk. (*Governments can pretend sources of revenue are earmarked for particular purposes, but functionally it's all one pot of money.) If what the government is proposing doesn't really fit this definition well, I suppose it's a political cover for whatever it is the government really wants to do.
Canada doesn't have a net surplus, which means except for enticing capital from other sources, the capital is borrowed. For the borrowed money, the gap between its RoI and what the government pays to service debt has to be a positive number or it makes no sense - might as well just borrow the money as needed for each investment. ("Investment" assumes it's not just a vehicle for transferring funds to favoured constituencies, including aboriginal groups and particular projects, while pretending it's not part of ordinary government spending.) Making money on the gap shouldn't be as difficult for government as for anyone else.
For capital enticed from other sources, the government is a publicly-funded and -backed enterprise competing with private enterprises for their customers. Generally this is a bad idea. Likewise, if it's just another version of the Canada Infrastructure Bank with a wider mandate for where it invests, it's in competition with all private lenders and is at least not a particularly good idea.
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You mean an "independent" board that is appointed by the government, invests according to the whims of the government of the day, is allowed to drain the capital as needed and has no fixed contribution to the raw funds?Ask Alberta how that worked out for them
Also part of the reason the Alberta Pension Funds are not doing as well as the CPP - a group I have much more respect for.
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Survey says: time to focus on the economy, Team Red.
edmonton.citynews.ca
angusreid.org
Tick tock?
Poll suggests Canadians want Carney government focused on affordability in next year
OTTAWA — A new poll from the Angus Reid Institute suggests Canadians are giving Prime Minister Mark Carney’s government a passing grade in its first year of international relations, but it has failed to meet expectations on affordability issues. The poll asked 2,013 Canadians a series of...
edmonton.citynews.ca
One-year post election review of Mark Carney
A year post-Carney win, most say he’s met foreign policy expectations, fallen short on affordability
angusreid.org
daftandbarmy
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Survey says: time to focus on the economy, Team Red.
Poll suggests Canadians want Carney government focused on affordability in next year
OTTAWA — A new poll from the Angus Reid Institute suggests Canadians are giving Prime Minister Mark Carney’s government a passing grade in its first year of international relations, but it has failed to meet expectations on affordability issues. The poll asked 2,013 Canadians a series of...Tick tock?One-year post election review of Mark Carney
A year post-Carney win, most say he’s met foreign policy expectations, fallen short on affordability
"Qu'ils mangent de la brioche"
(Falsely attributed to Marie Antoinette, but useful during the French Revolution)
MilEME09
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yep AiMCO is a disaster and lost 2.8B last year, yet we are to believe they could manage an Alberta Pension plan just fine, that no one wants
daftandbarmy
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A little healthy (and well informed) skepticism...
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